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Differential on monetary market narrows
Banks’ peak deposit interest rate has dropped from 19 percent to 18 percent since late July, according to a report from the State Bank of Vietnam.
The figures for State-run commercial banks remain stable at 17-17.3 percent per year while those of joint stock banks vary between 18.13 percent and 18.25 percent. Thus, the annual interest rate gap between State-owned banks and joint stock banks has narrowed to just more than 1 percent compared with 2 or even 3 percent before.
Economic experts predict that the wave of falling interest rates would continue with more commercial banks joining in after the State Bank of Vietnam declared that it would keep the annual basic interest rate at 14 percent in August, the third month running since the rate was set.
The gap between loans and deposit rates has also been reduced on the market as an increasing number of banks are lowering their annual loan rates by 0.5 - 1 percent for VND deposits and by 0.5-2 percent for US$ deposits.
Experts say that this is a positive trend of competition, especially since “state giant”, the Bank for Investment and Development of Vietnam, has announced it will decrease its lending interest rates for a second time without changing its previous deposit rates.
The relative stability of foreign currency market has helped make the VND-US$ exchange rates fluctuate slightly at around VND16,495 per US$ in early August. The corresponding rates on the free market are also stable at VND16,750-16,770 per US$, which are not far off the rates listed by commercial banks.
However, given the current domestic and global high inflation, experts warn that the State Bank of Vietnam should pay special attention to consolidating its capacity to supervise and administer risks as well as building in an early warning system.
VOV
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