According to Jinshi, as the Vietnamese dong fell to a record low, the market expects the Vietnamese central bank to raise interest rates as early as this month. Brian Lee, an analyst at Maybank, and others wrote: "We expect the Vietnamese central bank to raise interest rates by 50 basis points to stabilize the falling Vietnamese dong."
Emerging markets have been pressured by a stronger dollar this year, with Indonesia unexpectedly raising interest rates in April to boost the rupiah. Vietnam’s central bank was the only monetary authority in Southeast Asia to ease rates last year and has so far refrained from adjusting its refinancing rate, which currently stands at 4.5%.
MUFG analysts said officials may first consider other options, including withdrawing liquidity and raising interbank rates while selling foreign exchange reserves to prevent the dong from weakening further.
