The State Bank of Vietnam (SBV), the country’s central bank, has the necessary resources, capabilities and instruments to stabilize macro-economic conditions and the monetary market, according to Pham Thanh Ha, head of the SBV’s Monetary Policy Department.
|Pham Thanh Ha, head of the SBV’s Monetary Policy Department.|
The SBV is ready to sell foreign currency to ensure forex market stability if necessary, Ha told the SBV's portal on March 17.
Ha said the SBV’s decision to reduce policy interest rates, including the refinancing interest rate, discount interest rate, interest rate applicable to overnight loans, and interest via open market operations (OMO), indicates its willingness to support credit institutions in need of capital.
Meanwhile, a reduction of the interest rate cap to 4.75% annually for deposits with maturities of less than six months would present opportunities for banks to restructure their loans towards longer maturities.
On this basis, lenders would have more room to reschedule debt payment, waive and lower interest rates for customers hurt by the Covid-19 pandemic, stated Ha.
Ha expected a 0.5-percentage-point decrease applied to short-term loans for enterprises in priority fields would help reduce their financial costs.
“The SBV has taken into consideration macro-economic factors and inflationary pressure before making a move to lower interest rates,” said Ha.
In the coming time, the SBV would continue to closely monitor the macro-economic conditions, especially the global financial market to ensure proper and flexible management of the monetary policy, Ha stressed.
On March 17, the SBV cut its policy interest rates by 50 - 100 basis points. Accordingly, the refinancing interest rate was down from 6% per annum to 5%, rediscount rate from 4% to 3.5%, overnight interest rate from 7% to 6% and interest rate via OMO from 4% to 3.5%.
The SBV also lowered the interest rate cap to 4.75% annually from 5% for deposits with maturities of one month to less than six months.
Meanwhile, the SBV also ordered banks to lower the maximum lending rate for short-term loans to 5.5% from 6%, aiming to help companies operating in the fields of agriculture, high-tech industries and exports, among others. Similarly, that rate at people’s credit funds and micro finance services is down from 7% to 6.5%.
The cuts took effect on March 17.