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Overnight rates down on strong liquidity
Interest rates on overnight dong loans in Vietnam's interbank market have fallen more than 40 basis points in the past week due to the high level of funds at banks, bankers said on Monday.
They said the rate had fallen below 5 percent, at one point nearing the 4.7 percent level seen in 2007.
The central bank said in a weekly report seen on Monday that average rates on overnight loans fell to 5.54 percent last week, down 42 basis points from the previous week.
"We continue to see strong short-term dong liquidity at banks and one of the main reasons is the money from stock investors who cashed in on recent rallies and have now stashed it away in short-term bank deposits," a banker in Hanoi said.
Vietnam's Ho Chi Minh Stock Exchange has lost more than 7 percent in the past week as investors have taken profits on the market rebound. The index is still nearly double its lows in February.
Interest rates on longer-term deposits rose as banks sought more long-term funds.
The central bank's report said several banks including Sacombank, Techcombank, Eximbank and HD Bank raised interest rates by 20 to 50 basis points on their 36-month deposits, with the highest rate offered at 10.1 percent by HD Bank.
"There have been signs that the rates on dong deposits are rising, with the average rates now at 8.2 percent, up from 7.99 percent last month," the Dau Tu newspaper quoted State Bank Governor Nguyen Van Giau as saying.
Giau said most of the banks were raising rates to meet increasing borrowing demand, especially from the consumer finance sector, where banks can lend at negotiable rates outside the 10.5 percent ceiling regulated by the central bank.
Reuters, vietnews
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