Doanh Nhan Vietnam has compiled a range of views on whether or not the State Bank of Vietnam (SBV) will or even can reduce interest rates before the end of the year. Speculation is varied with UOB and MB Securities predicting further cuts and Rong Viet Securities, Maybank Securities, and VNDirect Securities saying further cuts are unlikely.
Why it matters: The SBV uses a number of different mechanisms to control the exchange rate, including interest rates, treasury bills, credit growth limits, and foreign reserves to name but a few. Whereas exchange rate stability may be useful for exporters (i.e. foreign manufacturing firms) the broad range of levers and pulleys it has at its disposal to keep it that way can make it difficult to predict exactly what it might do next. This may increase risk for investors in other sectors.