[Vnbiz] possible rate cut in August? are they joking?

[Charles Vo]

http://www.thanhniennews.com/business/?catid=2&newsid=39890

If the government thinks a slight decrease in June from the raging Zimbabwe-like inflation in May is something to gloat about, they are just fooling themselves into thinking stability is here.  Petrol prices have been suppressed.  That's not to mention the massive pressure put on businesses to keep prices of many goods artificially low.

IMF is right.  The Vietnamese government needs to go FURTHER.  Paul Volker should pay a visit to Vietnam.  Having bubbleman Greenspan talk to Nguyen Tan Dung may have have given him the idea that growth at the expense of the local currency is preferred.  

The dong is hated by many local residents.  It's still at 17550 dong to a dollar even after the elevated rate hikes.  This is way above the 16000 per dollar it was just a couple of months ago.  That's a 10% depreciation.

At least keep the rates as they are until the dong currency stabilizes for a few of months.  The reason why banks have to keep deposit rates high is because that is the only reason why some local residents would even bother to convert back to the dong from the dollar.  Lower the rates even slightly and you get an exodus.

Businesses may be crying now for a rate cut.  Who cares?  The United States in the Volker-era went through this crap.  Many businesses closed.  United States came out fine.

I think the crap is going to hit the fan for the dong next year, but the Vietnamese government is trying to accelerate that process.