Vietnam Sees USD Deposit Interest Rate to Fall Further

USD deposit interest rates at commercial banks in Vietnam have been decreasing and are expected to drop further if outlets for the dollar capital cannot be improved, state media reported.

 

The three-month term USD deposit rates have fell to 2.2-2.25 per cent per annum, while the rates for VND deposits of the same term is 7.2-7.4 per cent per annum.

 

Bankers have to reduce USD deposit interest rates as they found that USD deposits seem to be increasing, while the demand for USD loans has decreased.

 

Statistics from the State Bank of Vietnam showed that USD deposits increased by 2.3 per cent on year in Jan, and by 1.13 per cent over the end of last year, while USD loans decreased by 2.7 per cent from February 2009 over the end of last year.

 

The VND deposit interest rate saw little increases, while the USD deposit interest rate went the contrary direction in the week from February 26 to March 4, t

 

During the time, the average USD interest rate of 3-month term deposits offered by joint-stock banks was 2.21 per cent per annum, while the rate offered by state-owned banks was lower, at 2.04 per cent. Meanwhile, state-owned banks’ rate was 2.08 per cent the week before last.

 

Demand for USD loans has been weak since commercial banks applied VND interest rate-subsidized program. Businesses prefer VND loans with preferential interest rates rather than USD loans because they fear exchange rate fluctuations.

 

Experts believe that the demand for USD will stay low in the coming time, as the subsidy program will last until the end of 2009. (Youth, ATPVietnam)