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Interest rates to be kept relatively stable
The State Bank of Viet Nam will hold interest rates "relatively stable" during the remainder of the year, says the director of the central bank's monetary policy department, Nguyen Thi Hong, calling significant recent cuts in interest rates a positive sign even though the overall economic picture remained troubling.
Yesterday, the ceiling rate that commercial banks can pay in deposit interest was lowered from 11 per cent to 9 per cent per year, pursuant to a State Bank decision issued last week. The move represents the fourth time the rate cap was tightened within the last three months, with a total cumulative adjustment level of 5 percentage points.
The central bank also cut key lending rates, with the refinancing rate falling from 12 per cent to 11 per cent, and the discount rate from 10 per cent to 9 per cent. It has also targeted allowing exchange rates to fluctuate by no more than 3 per cent this year, SBV Deputy Governor Le Minh Hung said. (The average interbank exchange rate listed on the central bank's website yesterday at 20,828 dong per US dollar.)
Lien Viet Post Bank vice chairman Nguyen Duc Huong said that lower deposit rates had already created improved conditions for banks to free up stagnant credit flows to help stimulate production on a national scale.
Hung said at a meeting late last week that recent deposit rates have been reasonable enough to balance the interests of depositors and borrowers in a context of easing inflation. Maintaining stable interest rates would ensure economic conditions were predictable for enterprises and help them avoid financial shocks.
Companies have continued to complain that lending interest rates remained high, with some sectors seeing rates of over 20 per cent per year. However, Hong said this was normal for non-prioritised sectors in the current economic context, for example, real estate and securities investment.
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