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Money Supply

The increase in prices and wages, as well as a mismanaged devaluation of the dong in the early 1980s, contributed to increases in the demand for credit and in the actual amount of currency in circulation. Domestic credit subsequently increased to reflect the large price adjustments that were made, the increase in inventories, and the emergence of bank-financed budget deficits. Credit to the commercial sector accounted for nearly half the total outstanding capital-credit. The expansion of domestic credit was reflected in a proportional expansion in liquidity. Total deposits rose significantly, and the volume of cash in circulation increased. Interest rates were adjusted accordingly in order to restrain growth in credit and the amount of cash in circulation. The rate on savings deposits was raised, and lending rates were lowered to reflect higher deposit rates.

Data as of December 1987