Analysts foresee more policy rate cuts in Vietnam in 2024

28 Feb '24

2 min read

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Insights

Saigon Securities Corporation feels there is still scope for Vietnam's central bank, which cut interest rates four times last year, to make another cut in 2024 to boost growth.
The Vietcombank Securities Company, meanwhile, forecast that the Vietnamese dong might still devalue against the dollar when interest rates continue to break deep into the bottom zone.

Analysts from Vietnam’s Saigon Securities Corporation (SSI) feel there is still scope for the country’s central bank to make another policy rate cut this year to boost growth. The State Bank of Vietnam (SBV) cut its interest rates four times last year.

Meanwhile, analysts from the Vietcombank Securities Company (VCBS) forecast that the Vietnamese dong might still devalue against the dollar when interest rates continue to break deep into the bottom zone.

The development of the exchange rate would depend largely on foreign currency supply from direct and indirect investment cash flows and remittances, the VCBS analysts observed in a recent report.

Expansionary fiscal and loose monetary policies would be extended for another year when growth is a top priority, the SSI analysts noted in a new report.

Lending interest rates on existing loans could fall by another 50-100 basis points in the first half this year, they feel.

It would be, however, tough for deposit interest rates to continually decrease sharply, they said, forecasting 12-month deposit interest rates by the end of 2024 to be about 5.5 per cent per year, according to a domestic news agency.

The SSI analysts foresee inflation to be at 3.8 per cent this year and the risk of inflation is not very high.

However, inflation risks can come from cost-push factors, including potential increases in crude oil and other commodity prices as well as a rise in the government’s minimum wages.

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