Banking & Finance

Many banks adjusted their deposit interest rates upwards in the first half of April. With inflationary pressure continuing for the foreseeable future and with demand for credit growing during the economic recovery period, deposit rates are forecast to continue to increase.

With the USD consolidating its strength while the risk of inflation in Vietnam is increasing, the KB Securities Company (KBSV) believes that the USD/VND exchange rate may increase slightly, in the range of 0.5-1 per cent, during 2022. The small increase is due to the stable supply of foreign currency.

There were over 927,000 accounts in the derivatives market in the first quarter of the year, with trading down against the fourth quarter of last year. Trading in March was, however, up by 35 per cent against February.

Analysts believe that the State Bank of Vietnam (SBV) will not reverse its monetary policy even though inflationary pressure is increasing due to cost-push factors. According to the VnDirect Securities Company, the three main reasons are that the CPI is still low, domestic demand is still relatively weak, and the SBV still prioritizes the goal of maintaining low lending rates to support the recovery of businesses and the economy after the pandemic.

According to the Viet Dragon Securities Corporation (VDSC), interest rates on bank deposits have increased only slightly, by 30-50 per cent, which is not considered high, while the stock market is still gloomy, which together with large payouts have led most insurance companies to forecast negative profit growth in 2022.

Under pressure from credit growth and inflation, bank deposit rates have increased since the beginning of this month. The highest rate was 7.6 per cent per annum. Experts predict that the deposit rate at many banks will be much higher this year than in 2021.