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Dong, dollar rates in opposite move
Vietnamese banks have raised interest rates on dong deposits in order to increase their lending capacity as part of a government stimulus package while cutting dollar rates to help improve liquidity, bankers said.
State-run banks, which account for the bulk of lending, raised the average rate on 12-month dong deposits to 8.01 percent in the past week from 7.85 percent in late May, the State Bank of Vietnam's weekly reports said.
Partly private banks offered to pay an average 8.29 percent on the deposits, up from 8.25 percent in the week ending June 3.
Ho Chi Minh City-based Saigon Commercial Bank said it raised dong rates by between 0.05 and 0.1 percentage point on all termed deposits of up to eight months as of last Friday to "keep old customers and attract new depositors".
Banks have lent VND338.43 trillion under the government's rate subsidy package as of June 11, up nearly four times from VND93 trillion at the end of February, the figures show.
The government started the lending scheme in February and covered 4 percentage points worth of interests on bank loans to businesses in a move to boost its economy. GDP growth slowed to 6.2 percent in 2008 from 8.5 percent the previous year.
Central bank governor Nguyen Van Giau told the parliament last Friday that loans by banks at the end of May rose 14 percent from the end of 2008, above their deposit expansion rate of 13.6 percent in the same period as reported by the central bank.
Giau said Vietnam could control credit growth this year, but he gave no forecast of the loan expansion. His comments came after experts voiced concern over the lending package, saying it could lead to inflation.
Also last week, the International Monetary Fund urged Vietnam to tighten monetary policy to rein in credit growth and support the its currency.
Banks have slashed their dollar deposit rates to help boost liquidity, as Vietnam forecast falling foreign investment inflows this year, a key source of foreign exchange to offset its trade deficit.
Partly private banks cut the 12-month dollar rates to an average 2.06 percent last week, from 2.35 percent the previous week. State-run banks have been keeping the rate unchanged at 1.5 percent since June 1, from more than 2 percent in May.
Vietnews
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