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Seeking the biggest bang for their buck, tael
The dollar deposit interest rate has climbed to 5.5 percent per annum, while the gold interest rate has surged to two percent per annum. Gold continuously jumps to new heights, while the stock market remains gloomy. Which investment channels should people choose?
Interest rates high in short term
Dollar deposit interest rates have increased to 5.5 percent from four percent per annum seen one month ago, before the decision on devaluing the Vietnam dong by 2.1 percent was made. At the same time, the gold price has experienced its highest increases in just a week. As a result, gold deposit interest rates offered by Asia Commercial Bank (ACB), Sacombank and Seabank have climbed from one to two percent.
Why are these rates rising? Securities investors believe it is because banks are hurrying to mobilise capital to meet requirements stipulated in Circular 13 on the required capital adequacy ratio.
The Circular, which will take effect on October 1, stipulates that commercial banks can lend no more than 80 percent of the capital they can mobilise. Meanwhile, at many commercial banks, the ratio has exceeded 90 percent. The circular poses many difficulties for banks’ operation; therefore, banks have proposed that the central bank amend the circular.
Dr. Cao Sy Kiem, former Governor of the State Bank of Vietnam (SBV), remarked: “The sharp dollar deposit interest rate increases will not last for too long, because banks must consider rates in harmony with dong and other currencies interest rates.”
A deputy general director at a big bank, shared the same view, saying that the current increases will be a “short wave.” Banks now hope that SBV will amend some regulations of Circular 13.
“Any changes to the circular that help ease difficulties for banks will lead to lower interest rates. Gold deposit interest rates will be eased first, then dollar interest rates,” he explained.
At present, dong interest rates are hovering around 10.6-11.2 percent per annum. However, the general director predicted that actual interest rates may even be higher soon, when commercial banks offer special promotions.
Since banks dare not raise rates officially, as the Government and SBV have called on them to ease interest rates, they must offer preferences to depositors, which makes actual interest rates higher than quoted. Banks now lend money at 14.5 percent per annum to fund production projects, while interest rates on consumer loans run about 16.5 percent per annum.
Another financial analyst agreed that banks may have to raise dong interest rates, because the currently high dollar interest rates will prompt people to withdraw dong to sell for dollars, which they will then deposit. In this case, a dong shortage may occur.
The gold price on September 21 climbed to 30.5 million dong per tael. Sacombank-SBJ reported on that day that “The demand for purchasing gold continues to rise slightly on the first day of the week. However, they are small buyers who want to hoard gold or must buy gold to pay debts. The market remains lackluster, because people and investors have become cautious with the new price records.”
According to Nguyen Thi Cuc, Deputy General Director of Phu Nhuan Jewellery Company (PNJ), choosing gold investment must be done only by investors who understand technical analyses and factors that may affect price performance.
“It is necessary to put eggs into different baskets, or, in other words, make different small investment deals. If you have 10 dong, you should use three dong to purchase gold, while the remaining seven should go elsewhere,” Cuc stated.
Nguyen Thanh Truc, General Director of Agribank’s Jewelry Company, remarked that gold prices are now at very high levels. Gold keepers should gradually sell gold if they purchased when prices were low. Now is not the right time to buy gold to store.
Additionally, Kiem advised: “At this moment, it would be safest to buy dollars, because the stock market’s index is now below 500 points and it will be hard to bounce back. I would not choose gold, because prices are overly high.”
vietnamnet, Tien phong
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