Central bank cuts compulsory reserve interest rates to support pandemic-hit economy
The new dong-dominated compulsory reserve interest rate has been reduced to 0.5 percent per annum, and for non-compulsory deposits to 0%, the regulator said in a statement on its website.
The interest rate paid for some State-owned financial institutions' compulsory deposits at the central bank was cut to 0.8% per year. This change came into effect from August 1.
This is the second time in this year, the State Bank of Vietnam cut the interest rates. The most recent adjustment was on March 16, 2020.
The compulsory reserve is a minimum amount calculated on the ratio of total deposits that credit institutions must deposit with the central bank to ensure solvency and reduce risks in savings activities. In Vietnam, this ratio should be 3 percent.
The interest rate adjustment was made to support the economic development when the Covid-19 is taking toll on the economy.
From the beginning of this year, the State Bank of Vietnam has implemented several measures to regulate the monetary policy to stabilize the macro-economy in order to support and solve difficulties for enterprises, maintaining jobs and ensuring social security.
The Southeast Asian country reported growth in second quarter at 0.36 percent, slowest in decades due to the impact of the coronavirus pandemic.
The country reported 30 more Covid-19 infections late Thursday, bringing the total number of patients to 747, with 10 deaths.