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Inflation slows during April
It would seem the State Bank of Viet Nam's recent moves to bring the official VND/USD exchange rate in line with the free market rate was paying off, as the currency situation appears to have been more stable than it has in many months.
Inflation in April was up only 0.14 percent, the lowest month-on-month rise since the same month last year, according to Vietnam Asset Management Ltd (VAM).
The country's year-to-date inflation stood at 4.37 percent in April, said VAM, a fund management company that primarily engages in public and private equity investment and advisory services in Viet Nam.
The lower than expected inflation has enabled the SBV to keep the base interest rate at 8 per cent for a sixth consecutive month, although many analysts predicted an increase.
The trade deficit continued to be a problem, and was estimated at US$1.25 billion for April.
Thus far in 2010, on an annual basis, Viet Nam was running a trade deficit equivalent to 23 per cent of total export turnover, slightly higher than the 20 per cent Government target set for the year.
Comparing the first four months of 2010 with the same period in 2009, there were impressive growth figures, with industrial production growth of 13.5 per cent, export growth of 8.9 per cent, and retail sales growth of 25 per cent.
The VN-Index responded relatively well to April's news, finishing at 542.37, up 8.6 per cent on the month
Out of crisis.
VAM also said the CPI Index, inflation, lower loan rate and other macro-economic indicators in April were positive signals, suggesting the Vietnamese economy was safely out of financial crisis.
These elements have contributed to bringing back investor confidence and capital flows to the stock market, especially from foreign investors.
Coupled with the conducive monetary market (Banks continuing to lower lending rates and SBV's stable monetary policy), the optimistic business results of the majority of listed firms in the first quarter are expected to help the market reach a higher level.
VAM experts, however, said the VN Index was unlikely to experience a significant jump in the near future as a short-term profit-taking trend from penny stocks was still the main strategy for retail investors and positive macroeconomic factors had somehow already been priced in.
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