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Deposit interest rates may fall to 9% by year's end
Deposit interest rates offered by commercial banks are likely to come down to between 9 and 10 per cent per annum by the year end, says Nguyen Van Binh, governor of the State Bank of Viet Nam.
Binh was quoted by Sai Gon Giai Phong (Liberated Sai Gon) newspaper as saying the central bank had previously slashed deposit interest rates according to the level of inflation in the country.
This year, it was expected that inflation would be brought down to below 10 per cent. If it reached 8 or 8.5 per cent, the deposit interest rate would be brought down 9 or 10 per cent, he said.
Early this year, the central bank had set a target of trying to cut the deposit interest rate by one point per quarter if the country's marco economic environment was favourable, the governor said.
"However, we are likely to have conditions to cut the deposit interest rate more quickly than predicted thanks to recent marco economic developments, particularly with regard to inflation," Binh said.
He also said that the deposit interest rate should not be slashed under 9 or 10 per cent because this level was reasonable since it would still ensure the position of Vietnamese dong and therefore ensure the stability of the foreign exchange market.
With the deposit interest rate of 9 or 10 per cent per annum, depositing dong at banks would continue to be an attractive investment channel if compared with other options like gold, foreign currencies and real estate, Binh said.
He said a 1.71 per cent decrease in credit growth in the first four months was easy to understand in the context of curbing inflation.
In previous years, credit growth had stood at very high levels, with an average increase of 34 per cent over the last 5 years, and 29 per cent over the last 10 years. However, this year's credit growth would be controlled at between 14 and 17 per cent to continue reigning in inflation and stabilising the marco economy.
Binh said that the central bank would closely watch the marco economy and initiate measures to help enterprises access bank loans at reasonable interest rates in order to help them maintain and develop their trading and production activities.
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