Vietnam ordered curbs on lending and urged less use of US dollars and gold as it strives to tame inflation and stabilize the economy.
Commercial banks must limit credit to "non-production businesses" such as those investing in the stock and property markets to 22 percent of total loans by June 30 and 16 percent by year's end, the State Bank of Vietnam said in a statement on its website on Tuesday. The central bank will double the reserve ratio requirements for those that fail to meet the deadline, the statement said.
Banks must also control the use of gold and dollars in deposits and lending, according to the statement.
The announcement signals Prime Minister Nguyen Tan Dung is implementing a drive against inflation he authorized last week. The government is also seeking to revive confidence in the nation's currency after devaluing the dong for the fourth time in 15 months on February 11.
"This highlights the need to increase the use of dong in the economy," said Tai Hui, the Singapore-based head of Southeast Asian economic research for Standard Chartered Plc. "The de-dollarization, de-gold movement is very much necessary to stabilize the dong. The economy is run on three currencies and unfortunately the local currency is the least popular of the three."