Dong declines on rate cut speculation; bonds fall

The Vietnamese dong fell Thursday after local media reported that the central bank may cut interest rates.

The local currency fell 0.03 percent, to VND16,615 as of 3:45 p.m. in Hanoi, according to data compiled by Bloomberg.

The State Bank of Vietnam is under pressure to reduce borrowing costs to help companies access loans, Tuoi Tre newspaper reported Thursday, without elaborating.

The State Bank of Vietnam plans to maintain its key rate at 14 percent this month, it said on September 26.

Vietnamese dong lending rates have dropped to about 19.5 percent in the past month, below the 21 percent maximum rate that banks are permitted to charge borrowers, the central bank said in a separate statement on October 2.

The central bank fixed Thursday’s reference rate for the currency at VND16,516 per dollar, compared with VND16,515 Wednesday, according to its website.

The currency is allowed to trade by 2 percent either side of the official rate.

Vietnam’s benchmark five-year bonds were little changed, yielding 15.96 percent, according to a daily fixing from 10 banks compiled by Bloomberg.

Thanhnien

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