Case Overview (International business) Essay Example | Topics and Well Written Essays - 1000 words

Case Overview (International business) - Essay ExampleTo fight this pomposityary fire, the central bank of Vietnam, the State bank of Vietnam has raised the key pertain rates to 14%. This was the latest in a flurry of interest rate increases since February 2011.This interest rate increase is to be accompanied by vulgar anti-inflationary measures like tighter monetary policy and tighter control on credit. The government of Vietnam has also pledged to cut the burgeoning budget deficit and check the bleeding public sphere of influence enterprises of the country.The package introduced by the government to counter this inflation is known as Resolution 11. The Resolution 11 clearly states that the government seems determined to control inflation even at the cost of economic growth.At the meeting of the Asian Development Bank in Hanoi, Vietnams Minister for Planning and Investment conceded that because of the antecedence of the government to control inflation, the Vietnamese economy wi ll fall short of its targeted growth rate of 7% to 7.5%.The private credit of Vietnam is a massive one hundred twenty% of the GDP. This means that Vietnam is a sort of global participate holder in credit creation. However, the saving grace is that bank deposits have kept pace with this record credit growth.Because of this exalted inflation, the dollarization and goldisation of the economy have increased. Ordinary Vietnamese citizens are resorting to hedging against the inflation by keeping their reserves in dollars and gold alternatively of dong.What has helped this dollarization is the easy availability of dollars because of the large stock of it. In spite of the capital controls, the stock of dollars in Vietnam is high, because of the remittances sent by the large army of Vietnamese unsettled workers working abroad.The banks of Vietnam also offer dollar deposits to the customers. To check the move to dollar deposits, the government has capped interests on dollar deposits to 3% against the very high interest rates of 14% on dong deposits.The country also has