The State Bank of Vietnam will reduce its refinancing and repurchase rates by 1 percentage point in the “next few days,” Governor Nguyen Van Binh said yesterday in Hanoi, following a request from Prime Minister Nguyen Tan Dung. The central bank will also lower the maximum interest rate banks can pay for deposits in dong, he said. Consumer prices rose 16.44 percent in February from a year earlier after increasing 17.27 percent in January, according to government data.
“Even though the rate cut was expected by many investors, the news coming out yesterday still strongly supported the fixed-income market as the central bank expressed its higher confidence about the macroeconomic situation,” said Nguyen Duy Phong, a Ho Chi Minh City-based analyst at Viet Capital Securities.
The yield on three-year notes fell nine basis points, or 0.09 percentage point, to 11.43 percent, according to a daily fixing from banks compiled by Bloomberg. The dong was steady at 20,830 per dollar as of 3:50 p.m. in Hanoi, according to data compiled by Bloomberg.
The central bank set the reference rate at 20,828, unchanged since Dec. 26, its website showed. The currency is allowed to trade as much as 1 percent on either side of the official rate.
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