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Source: Reuters

UPDATE 1-Vietnam raises two policy rates to fight inflation

Published: 29 Apr 2011 03:35:44 PST

HANOI, April 29 - Vietnam's central bank tightened credit for the second time in four weeks on Friday, increasing two policy rates each by 100 basis points just days after the government reported annual inflation in April near a three-year high.

The State Bank of Vietnam hiked the refinance rate to 14 percent and the discount rate to 13 percent, following an increase in the reverse repurchase rate charged to banks for loans via open market operations to 13 percent on April 1.

Vietnam's government has tightened credit since February to counter some of Asia's worst inflation. Consumer prices climbed 17.51 percent in April, the highest since December 2008, official data showed on Sunday.[ID:nL3E7FP07D]

Inflation has yet to ease, in part because the authorities have also imposed double-digit increases in electricity and fuel prices which economists say are still filtering through.

The central bank gave no explanation for Friday's increases in the refinance and discount rates.

The reverse-repo rate, another rate markets keep a close eye on, was left unchanged at 13 percent on Friday. The base rate, Vietnam's former benchmark, was also left untouched at 9 percent.

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