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Banks concerned US dollar supply not meet up demand
Many lenders are concerned about the gap of the US dollar supply and demand as they struggle to mobilize the greenback, while lending demand remains very high.
Financial experts say many people converted their dollar deposits to dong after the state bank cut the greenback rate cap to support the local currency.
The State Bank of Vietnam lowered the rate cap on dollar deposits by individuals to 2 percent from 3 percent, and cut the limit for institutions to 0.5 percent from 1 percent, starting June 2. Banks have also been ordered to set aside more dollars as reserves.
Figures from the central bank show dollar deposit growth of commercial banks last month declined 3.6 percent from May’s close and moved up slightly 9 percent year-on-year.
Phan Thanh Hai, an official from GiaDinh Bank, says dollar depositors favor short- and unfixed-term deposits, while no one deposits their money in the bank for six months or more.
Dollar lending growth, however, rose 2.4 percent from May’s close and sharply increased 23.5 percent year-on-year.
Many lenders have even loaned an amount, which makes up 140-150 percent of their total deposit. Others have paid dollar depositors interest rates on negotiable basis, which are higher than the government’s cap.
A Ho Chi Minh City-based bank offers depositors with short-term deposits worth more than US$10,000 interest rates, which are higher than the cap by 1-1.5 percent per annum, the director discloses to Dau Tu Tai Chinh Newspaper.
Interbank rates on dollar loans showed signs of slightly rising across the board last week, the central bank says in a report.
Overnight rate for interbank electronic payments edged up 0.16 percent to 0.85 percent per annum, while fixed rates ranged from 1.48 percent per annum to 3.3 percent per annum, according to the state bank.
Many banks say despite the slowing deposit growth, dollar lending demand of institutes remains very high as rate on dollar loans amounts to 6.5-8 percent per annum, which is more attractive than dong lending rate of 18-22 percent per annum.
Many businesses also favor greenback loans as they expect the dong-dollar exchange rate will be stable until the end of the year.
However, banks are encouraging dollar borrowers to convert their debt into the local currency in order to stabilize the greenback supply and demand.
Director of a joint-stock bank, who wishes to remain unnamed, says borrowers who want to convert their debts in dollar into dong will be offered a dong lending rate, which is lower than the common rate by 0.5-1.5 percent per annum.
Banks also raised buy rate of dollar last week in an effort to meet up the increasing demand for the greenback of institute borrowers, whose debts are coming due.
Thanh Nhu – Vu Minh
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