State Bank of Vietnam (SBV) fixed interest rate in US dollar to 0 per cent/year; however, commercial banks receive US dollar and pay interest rates in VN Dong. The State Bank tries to stop such evasion.
Cheap resource relying on interest rate
The State Bank has applied 0 per cent interest rate to US dollar in late September 2015 and mid December 2015. According to Department of Currency Policy, it is part of the solution to restrain “dollarisation” and stabilise foreign exchange rates.
The measure against “dollarisation” in the past 15 years has gained momentum with 0 per cent interest rate making US dollar less attractive. It is estimated that “dollarisation” has decreased from 18 per cent five years ago to 11 per cent at present. Credits on foreign exchange are reducing and will terminate in business transactions.
However, as businesses have big credits in foreign exchanges; commercial banks must continue savings and credits in foreign exchanges in compliance with the law.
Certain commercial banks have helped US-dollar exporting businesses with credits in VND at interest rate of 3.5 per cent a year, less than 50 per cent of the current interest rate. Customers only have to pay for the difference in US$-VND exchange rate. In fact, credits with ½ interest rate started in 2012, and many exporting businesses have relied on it with exchange rate around 2 per cent a year. However, since August 2015 with the devaluation of Chinese currency and increase in exchange rates, businesses are more cautious with those credits. Meanwhile, the State Bank accelerates the process of “de-dollarisation”, minimising credits in foreign exchange from April 2016.
State Bank says: NO
Certain economic managers and experts are in favour of businesses with low-interest rates as “de-dollarisation” is a process with road map. According to Mr Truong Van Phuoc, Vice President of National Financial Supervisory Commission, the Yen, Euro or US dollar are resources of the nation. As credit organisations wish to increase savings in foreign currencies, especially US dollar, it is understandable that they have to “reciprocate” their customers in some way. It is a new development but must be considered accordingly. At present, as Japanese Yen, EUR, Australian and Singapore dollars are increasing in value against US dollar, so it is necessary to reconsider interest rate in US dollar.
As US$ value increased in late 2015, interest rate must be maintained at 0 per cent.
However, representative of Monetary Policy Department (SBV) said that managing agency persists on the decision. Such policy and related measures have in large measure controlled inflation and macro-economic stability.
On May 6, Governor of the State Bank issued documents 3254/NHNH-TTGSNH and 3255/NHNN-TTGSNH on interest rates demanding credit organisation and foreign bank offices to apply current instruction and regulations on interest rates, especially regarding US dollar. The State Bank will increase its inspection on the implementation of those regulations.
Bao Chau
Vietnamese
