Vietnamese inflation slowed for a third month in November, boosting the central bank's scope to support the economy by avoiding interest-rate increases.
Consumer prices rose 19.83 percent this month from a year earlier, according to figures released by the General Statistics Office in Hanoi Thursday. That's lower than October's 21.59 percent pace. Prices rose 0.39 percent in November from October.
Vietnam's inflation remains the highest in a basket of 17 Asia-Pacific economies tracked by Bloomberg, compounding risks to economic growth from a trade deficit and a faltering global recovery. Neighbors Indonesia and Singapore have eased monetary policy in recent weeks to shield expansion, as the impact of Europe's sovereign-debt crisis saps demand for Asian exports.
Vietnamese "inflation will remain high but the trajectory is improving, and that will give them some cover to hold or lower rates," Ashok Bhundia, a fixed-income strategist at Bank of America Merrill Lynch in Hong Kong, said before the release. "The bias now, particularly with the global economy slowing and the potential negative impact on key export markets, would be for policy makers to look for ways to ease pressure on businesses."
The benchmark VN Index of stocks rose 0.2 percent as of 9:36 a.m. local time, while the dong was little changed at 21,008 against the dollar, according to data compiled by Bloomberg. The stock index has declined about 20 percent this year, and the currency is down about 7 percent in the period.
The State Bank of Vietnam raised its refinancing rate last month to 15 percent from 14 percent. Commercial lending rates in 2011 have climbed as high as 27 percent, according to the World Bank. In February, the government prioritized the fight against inflation by ordering tighter monetary and fiscal policies to stabilize the economy.
Cutting policy rates at this stage would be a "mistake," Masato Miyazaki, a division chief in the International Monetary Fund's Asia and Pacific department in Washington, said in a telephone interview this month during a visit to Hanoi.