|
US$ deposit interest rate decreases foreseeable
US$ interest rates keep rising and businesses are rushing to borrow money in dollars. However, experts have warned that the situation will be quite different in the coming time.
The US$ deposit interest rate has hit the 8% per annum threshold, an increase of 3% per annum over last month, and is 6% higher than the basic interest rate announced by the US FED.
High interest rates have helped commercial banks more easily mobilise capital in dollars. Ngo Xuan Dung, Director of VIB Bank in HCM City, said that in the first five months of the year, the mobilised capital in US$ has increased by 40% over the end of the year. More dollars have been flowing into banks since banks raised deposit interest rates to 7.2% per annum for 11-month term deposits.
Le Dac Son, General Director of VP Bank, also said that the mobilised US$ capital recently was bigger than that of the first months of the year. By the end of May 2008, VP Bank had mobilised some VND3tril worth of capital in dollars.
The factor that makes analysts think that US$ interest rates will go down in the time to come is that the demand for US$ loans of businesses is decreasing.
Son at VP bank also affirmed this, adding that though US$ lending interest rates are just half of VND deposit interest rates, businesses are hesitating to borrow in US$ for fear of exchange rate risks.
The dollar price fluctuations in late May and early June have been worrying businesses. On the black market, one dollar was converted to VND18,000 late last week. The exchange rate quoted by commercial banks was lower at over VND16,000/US$1. However, in fact, it is very difficult to buy dollars from banks.
If an import company borrowed dollars for two months to make an import deal in late March 2008, it will have to buy dollars at much higher prices in May to pay bank debts. The VND/US$ exchange rate was VND15,500/US$1 in March and VND18,000 in May, a gap of VND2,500US$1.
Dao Hong Chau, Deputy General Director of Eximbank Vietnam, said that if the situation cannot be improved (the mobilised capital increases, while the demand for US$ loans decreases), banks will have to reconsider deposit interest rates.
The US$ interest rate is now just equal to ½ of the VND deposit interest rate. However, the US$ interest rate now represents a sharp increase compared to the beginning of the year. Most banks are offering 7.5-8% on 12-month term deposits. This proves to be contrary to the US$ interest rate performance in the world. While FED’s interest rate stays at 2%, Vietnam’s interest rate is overly high at 8% per annum. Therefore, experts say that sooner or later commercial banks will slash US$ deposit interest rates.
VNN
|
