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Dong rates up on strong loan demand
Vietnamese banks increased interest rates on dong deposits by up to 50 basis points in the past week as they sought to raise more funds to meet soaring demand, bankers said on Monday.
Interest rates on dong deposits rose to as high as 9.8 percent per year in the past week, the central bank said in its weekly monetary report.
Bankers said dong-denominated loans have now expanded by 21 percent from the end of 2008 to around 1,200 trillion dong, or $67 billion, nearly surpassing the central bank's credit growth target of 23 percent for the whole year.
They also said the Ministry of Finance had proposed to the government to keep credit growth this year at below 30 percent to avoid a return of double-digit inflation.
They said the ministry had advised the government to keep the dong's base rate unchanged at 7 percent to prevent banks from raising rates on dong deposits beyond a central bank's regulated limit of 10.5 percent per year.
Last week the Finance Ministry said total dong deposits in January-May period rose 16.4 percent from the end of 2008 to VND1.2 trillion.
"Demand for dong loans is expected to strengthen between now and year end on the back of the signs of economic recovery, including the impressive rebound in the stock markets," a banker in Ho Chi Minh City said.
Meanwhile, on the dollar front, the central bank said in its weekly reports all banks operating in the country had agreed to cut interest rates on dollar deposits to a maximum of 1.5 percent and the rates on dollar loans to a ceiling of 3 percent from Monday.
Bankers expected the move would encourage exporters to sell more of their greenbacks to banks, which have been suffering from a shortage of dollars available to sell to importers.
Vietnews, reuters
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