The Fact and Money Policy in Vietnam 2007

III, The application of impossible trinity in VietNam in 2007

1, The fact

Viet Nam joined the WTO , 11 January 2007, taking the organization’s membership to 150. Macroeconomy in VietNam was considerably affected by economy of the world. It created more opportunity for VietNam to attract more investment form developing countries.Total social investment capital in 2007 is estimated at about 464.5 thousand billion VND, equaling 40.6% of GDP, up 16.4% compared to 2006, of which the State's capital increased by 17.5% which official development assistance (ODA) increased 12%, capital of foreign direct investment (FDI) rose 17.1%, business investment increased by 19.5% population. The stock market developed rapidly, becoming a channel to mobilize long-term investment in economic importance.

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Three main capitals in VietNam from 2001 to 2009 (VietNam index)

In 2007, hyper inflation happened". The cause of inflation may be due to demand pull (by aggregate demand in the economy increases), cost-push (by the factor input costs rise), lack of supply (when the economy reaches or exceeds level of potential output), excessive money supply growth (increasing the total payment - M2) and psychological factors (inflation expectations). Analysising of inflation in our country in recent years, there were enough reasons, just as cost-push inflation - due to input costs (raw materials, transportation, storage, energy, wages ... ) increasing, pushing up prices at the output high was both demand pull inflation - as demand of consumers, businesses and government increased, which were accompanied by increased prices of goods and services; medium was expected inflation – to arise from psychological factors and speculation.

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(ADB bank)

2, The application of impossible trinity :

a, Purchasing foreign currency :

Unlike previous years, in 2007, it was aimed to maintain decreasing the currency rate to a few percentage points, creating favorable conditions for exports. However...