Credit demand in Vietnam is expected to stay low in the foreseeable future as the Covid-19 pandemic continues to be complicated globally, said a central banker.

With fewer concerns about currency and external stability, Vietnam’s central bank is likely to be more comfortable with delivering interest rate cuts to support growth.

Lower policy rates would enable commercial banks to cut interest rates in a more sustainable way, which in turn contribute significantly to economic recovery, said a central bank official.

The cut is applied to the refinancing interest rate, discount interest rate, and overnight lending rate.

The central bank had previously cut the benchmark interest rates by 0.5 – 1 percentage point in March.

During the two-month period, deposits from economic institutions in Vietnam’s banking system declined 4.84% against the end of 2019 to VND3,770 trillion (US$161.08 billion).

Vietnam central bank is ready to intervene in the foreign exchange market in case of necessity.

With nearly US$83 billion of foreign exchange reserves, the State Bank of Vietnam has more than enough reserves to comfortably meet redemptions.

Vietnam's continued trade surplus helps strengthen its forex position.