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Central bank clamps down on high interest rates
The State Bank of Viet Nam on nov. 08 set up an investigation team led by Deputy Governor Tran Minh Tuan to work with Ha Noi based banks to check out the unusually high interest rates.
In response to the move, Techcombank and Seabank, which had raised deposit interest rates to a record high of 17-18 per cent per year, immediately cut interest to around 14 per cent late yesterday.
Late last week, the central bank sent a message that the strong rise of commercial-bank interest rates was unavoidable, but it would help reduce capital access and control rising inflation.
However, the central bank added that taking into account a double digit possibility, deposit interest rates should be at least 13 per cent in order to balance interest of both depositors and borrowers.
"The exceptionally high interest rates imply that some banks have faced capital problems," a senior official from the central bank who wished to stay anonymous said. "There's nothing wrong with the system as a whole."
The central bank has pumped tens of trillions of dong into the interbank market to support the system's liquidity. On Tuesday, the total trading volume hit VND40 trillion (US$1.92 billion).
Interest rates began rising after the central bank raised the benchmark interest rate from 8 per cent to 9 per cent in November and, to some extent, allowed commercial banks to set their own interest rates to attract more depositors while inflationary pressure grew.
The consumer price index hit 9.58 per cent for the first 11 months of the year.
The governor assured the measures would apply for only three to six months and would have no long-term consequences.
The State Bank of Viet Nam announced that credit growth would reach the annual target of 25-27 per cent.
While tightening credit for the non-manufacture sector, the system has continued to finance the agricultural sector, export, and small and medium sized enterprises at reliable rates of 12-14 per cent.
The Government has instructed the central bank to review the impacts of the monetary policy and manage it flexibly to actively stabilise the economy in order to meet business demands, to secure payment capacity and stabilise foreign exchange. The central bank was also instructed to work with the municipal people's committee to expose and punish gold and foreign currency accumulation and speculation that harmed the market.
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