Tag: interest rate

Exchange rates cannot be sacrificed for low interest rates, says deputy governor

Average deposit and lending rates down 0.15% and 0.25%, respectively, this year as of January 31.

Rates hit their lowest for two decades.

People buying houses worth less than VND2 billion ($84,000) may be eligible for interest rate support of 2 per cent.

The central bank has said it will closely monitor the operations of credit institutions.

The government has urged the central bank to quickly amend and supplement unsuitable regulations to boost disbursement from the package.

At a discussion session on October 28, many National Assembly (NA) deputies said it is necessary to adopt solutions to restore Vietnam’s corporate bond and securities markets as soon as possible, to ease the pressure on credit. In particular, the government needs to closely monitor interest rates at banks, so that sectors carrying out production and business can access credit at an appropriate cost.

After the State Bank of Vietnam (SBV) raised the ceiling interest rate for deposits under six months to 6 per cent per annum, many banks increased their rates from October 25. The highest is at SCB, at up to 9.3 per cent per annum. Analysts have forecast that interest rates will continue to increase over the closing months of the year due to exchange rate pressure and inflation.

Credit institutions continue to expect that deposit and lending interest rates will increase in the fourth quarter. A survey by the State Bank of Vietnam found that 59-61 per cent of credit institutions expect an average interest rate increase of 0.37 percentage points in the quarter.

According to FiinRatings, factors affecting the profits of securities companies include liquidity risk, proprietary trading, interest rates, and exchange rates.

A negative deposit-credit gap and the State Bank of Vietnam’s withdrawal of money have tightened liquidity in the banking system. Interbank VND rates have skyrocketed. The overnight interest rate on October 4 was up to 7.74 per cent per annum, or 2.58 percentage points higher than in the middle of last week. Deposit interest rates are expected to continue to increase in the near future.

The State Bank of Vietnam (SBV) has simultaneously increased the refinancing interest rate to 5 per cent per annum, the rediscount rate to 3.5 per cent per annum, the maximum interest rate for demand deposits and terms of less than one month to 0.5 per cent per annum, and term deposits from one month to less than six months to 5.0 per cent per annum. Rates on overnight loans in interbank electronic payments and loans from the SBV to cover capital shortfalls in clearing payments to credit institutions and foreign bank branches is 6.0 per cent per annum.

In an updated report, Dragon Capital said that in an environment of rising interest rates, expected returns in the stock market are unlikely to be outstanding. In the short term, the market will see many fluctuations depending on developments around the world. However, the influence of external factors on Vietnam is much lower than in emerging countries and is not systematic.

To promote the interest rate support program from the State budget for loans to businesses, cooperatives, and business households, which has now been implemented for three months, the State Bank of Vietnam has required that commercial banks review efforts and notify eligible customers.

The State Bank of Vietnam (SBV) adjusted the selling price for USD from VND23,400 to VND23,700 on the afternoon of September 7. It also stopped listing the intervention buying rate. According to analysts, the decision to raise the selling price is mainly a defensive measure against upcoming US Fed interest rate hikes.

At a national conference on removing difficulties during the implementation of the 2 per cent interest rate support program, held on August 26, banks no longer proposed increasing the credit growth limit. Instead, difficulties raised this time mainly related to the identification of beneficiaries and lending conditions.

The interbank VND interest rate fell sharply during the week of August 8-12 from a large volume of bills maturing and money being pumped back into the market, resulting in the difference between VND and USD interest rates becoming negative. According to SSI Securities, the State Bank of Vietnam is implementing a relatively flexible monetary policy via open market operations in order to balance inflation, exchange rates, and interest rates.

Bao Viet Securities (BVSC) noted that the 12-month deposit interest rate had increased again by the end of July, by 0.07 percentage points to 5.77 per cent per annum. Rates may rise again in August. Instead of an increase of 0.1 to 0.2 percentage points, some banks raised rates by between 0.1 and 0.6 percentage points compared to June.

The interbank VND interest rate has fallen from 5.13 per cent per annum to 2.67 per cent, significantly narrowing the gap between VND and USD rates. This may put pressure on the exchange rate in the near term.

With money being continually added, the average trading interest rate in VND in the interbank market remains low while the transaction value of government bonds on the secondary market rose 42 per cent compared to last week. The State Treasury is expected to issue government bonds during the fourth quarter, but anticipated buying demand is not large, so the winning yield is expected to remain flat.