State Bank of Vietnam will cut the refinancing rate by 1 percentage point to 7 percent effective May 13 and reduce the discount rate to 5 percent from 6 percent, Deputy Governor Nguyen Dong Tien said at a briefing in Hanoi today. Vietnam’s economy expanded 5.03 percent last year, the least since 1999.
“Yields will probably go down in the primary and secondary markets following the rate cut,” said Nguyen Thanh Danh, a Ho Chi Minh City-based money-market dealer at Saigon Thuong Tin Commercial Joint-Stock Bank. “There’s a lot of demand for bonds as credit growth is still slow.”
The yield dropped five basis points, or 0.05 percentage point, to 7.75 percent, the biggest decline since April 22, according to a daily fixing from banks compiled by Bloomberg. The rate fell eight basis points this week, the most in a month.
Credit increased 1.4 percent as of April 23 from the end of 2012, Thoi Bao Ngan Hang, a central bank publication, reported May 6. The country is targeting 12 percent loan growth this year.
The dong advanced 0.1 percent to 20,935 per dollar as of 3:15 p.m. in Hanoi, according to data compiled by Bloomberg. The central bank fixed the reference rate at 20,828 today, unchanged since December 2011, according to its website. The currency is allowed to trade as much as 1 percent on either side of the rate.
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