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Banks fail to meet rising demand for dollar
The annual year-end spike in demand for foreign currency has set in, but it is unlikely that foreign currency loans by banks will expand sharply as a result.
Companies usually require foreign currency at this time of the year, the peak business season due to a clutch of festivals, to pay for imported goods and services.
The stable exchange rates, and massive differences between interest rates on dong and loans in the greenback have also added to the demand for dollar loans.
Independent analysts said the forex rate would not fluctuate by more than 2 per cent during the whole year.
Meanwhile, though interest rates on dong loans have been cut significantly, they remain twice as costly as dollar loans.
The lowest interest rates on dong loans are between 10 and 12 per cent, while on US dollars it is only 5-6 per cent.
Pham Thien Long, deputy director of HDBank, explained that the demand for foreign currency rose at the year-end due to the cyclical nature of demand for imports.
Dau Tu (Investment Review) newspaper quoted Pham Linh, deputy general director of the Orient Commercial Joint Stock Bank (OCB), as saying his bank offers dollar loans at 6-6.5 per cent to firms exporting agricultural products.
But banks are unlikely to meet the high demand, analysts said.
They pointed to Circular No 03/2012/TT-NHNN that took effect on May 2 which allows banks to lend foreign currency loans to pay for goods and service imported only to those able to repay from their foreign exchange revenues.
Thus, firms that did not have legitimate revenues in foreign currency from production or business activities cannot get loans in foreign currency, they said.
This has prevented a large number of companies from getting forex loans, they added
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