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Bloomberg
Vietnam’s central bank cut interest rates for the first time in more than two years to bolster the economy amid rising global risks.
The benchmark refinance rate will be lowered to 6 percent from 6.25 percent from September 16, the State Bank of Vietnam (SBV) said on its website.
The discount rate and overnight lending rate in the inter-bank market will be lowered by the same magnitude to 4 percent and 7 percent respectively, according to the statement.
The move was prompted by recent “unfavourable†global economic developments, with policy makers elsewhere including the US Federal Reserve and the European Central Bank lowering rates too, the
SBV said.
“The domestic economic situation continues to be stable with inflation being under control, money market and foreign exchange being stabilised,†it said.
The US-China trade war is weighing on global growth and hurting prospects for export-reliant nations like Vietnam. It’s also creating positive spillovers as some businesses shift production from China to Vietnam.
“This is quite unexpected but it is a good move by the central bank,†said Hoang Viet Phuong, the Hanoi-based head of institutional research & investment advisory at SSI Securities Corp. “It will help bring lending rates down to support businesses and bolster the economy. Interest rates have been kept at quite high levels for a long time,†Phuong added.
The benchmark VN Index rose 1.1 percent, the steepest advance since July 4. The government is forecasting growth of 6.8 percent for 2019, compared with 7.1 percent in 2018.