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VND deposits preferred to US$
As the VND/US$ exchange rate has been stable for the last two months, individual depositors are now favouring deposits in VND over dollars.
According to the Capital Sources Division under VIB Bank, the VND/US$ exchange rate last week still hovered around VND16,514-16,517/US$1. However, fearing possible bad impacts of the US financial crisis, many people are withdrawing deposits in dollars and making deposits in other currencies like the Euro, GBP or VND.
VIB Bank said that the State Bank of Vietnam is now purchasing dollars from credit institutions at VND16,600/US$1. Therefore, it is highly possible that the VND/US$ exchange rate will be stabilised and hover around that level.
The director of a Hanoi-based joint-stock bank also said that the number of clients coming to the bank to withdraw US$ deposits and making VND or gold deposits increased considerably last week. This has also been happening at some other commercial banks.
“If the VND/US$ exchange rate stabilises or the dollar value decreases, the tendency of shifting from US$ to VND deposits will grow towards the year’s end,” he said.
In general, in September 2008, the VND/US$ exchange rate was stable, though there were some fluctuations in the third week of the month, when the dollar price increased slightly in the interbank market by VND30/US$1. However, the rate then dropped to VND16,570-16,590/US$1, levels seen earlier last month.
According to the State Bank of Vietnam, the VND/US$ exchange rate has been stable. The rates offered by commercial banks are VND100-300/US$1 lower than the allowed ceiling levels, while the rates on the black market are in accordance with the official rates.
An economist said that in the near future, many people may consider selling dollars for fear that the US recession will make the greenback value decrease.
If the US economy is slow to recover, the dollar price could fall to VND16,000/US$1. Meanwhile, the lower inflation rates in the last few months have restored the confidence of people in the local currency.
With the stable exchange rate and the big gap (10%) between the interest rates of VND and US$ deposits, it is clear that it is more profitable to make deposits in VND.
The big gap has been narrowed as banks are trying to slash deposit interest rates. However, experts say that the gap will still be big at 8-9% per annum, which means that VND deposits will still be more profitable.
VNN
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