Vietnamese central bank to cut rates Tuesday to help virus-hit economy

The State Bank of Vietnam will cut its policy rates from Tuesday to prop up the economy, which has been hit by the coronavirus pandemic. The virus, which has killed more than 6,500 people worldwide, has left firms in Vietnam's manufacturing industry suffering shortages due to supply chain disruptions.

The refinancing rate will be cut to 5% from 6% and the discount rate to 3.5% from 4.0%, the bank said in a statement. "The COVID-19 pandemic is evolving in a complicated manner, leaving a negative impact on the global economy," it said in the statement.

The bank said the rate cuts were "in line with (Vietnam's) macroeconomic conditions and international financial markets" and "aimed at easing difficulties faced by business and production activities". China and South Korea, the Asian countries worst hit by the virus in Asia, are Vietnam's largest trading partner and largest source of foreign investment, respectively.

The central bank said it would also lower the caps on the interest rates of dong-denominated deposits and loans from Tuesday, cutting by 0.25-0.50 percentage points, depending on the maturities. As of Monday, Vietnam had 60 coronavirus cases and no deaths, the Ministry of Health said.