Deposits flowing to Vietnam gold market

Apart from inflowing into large commercial banks, deposits are seemingly heading for the Vietnamese gold market, according to Dau Tu (Investment) newspaper.
It is the surging inflation together with unappealing interest rates as previously that has provoked idle capital to reconsider carrying on with current deposits or investing in gold, real estate and securities.

It stands to reason that the flat mobilisation rate of 14pct p.a has prompted depositors to leave their money at reputable banks, which has been evidenced by the current trend of deposit switching from small lenders to larger ones.

Currently, small credit institutions have been facing up to a great deal of difficulties retaining present deposits as well as striving for attracting new ones particularly following the central bank’s tough punishments of several banks breaking the mobilisation cap rate.

The market has seen such small lenders as ABBank and WesternBank launching product named “Flexible daily deposit” with the interest rate of 14pct in an attempt to woo depositors. This product’s outstanding feature principally lies in the calculation of compound interest rate for interests will be added to the principal daily rather than on mature date.

Besides credit giants, gold market is another channel that savings are flowing into. Despite still being higher than the world price, domestic gold price have recently dropped to around 46.65 million dong per tael following a decline in the world gold price, which holds great attraction for idle capital.

Consequently, the assumingly reasonable gold price has incited a great number of people flock to gold particularly in the face of forecast of further gold hikes due to domestic galloping inflation and the current EU’s public debt crisis.

Such gold trading giants as SJC, PNJ and SBJ witnessed a steep rise in revenue over the last weekend and early this week when gold price surpassed the 47 million dong benchmark.

Nguyen Thi Cuc, deputy director of Phu Nhuan Jewellry J.S.C (PNJ) was quoted as saying that the demand exploded in the weekend due the affordable price, not to mention many customers who withdrew deposits for gold purchase. It is estimated that some 5 trillion taels were sold out and around 1 trillion taels were purchased only on 16 September.

The current 14 percent mobilisation rate has somewhat meant losses to depositors, which has caused part of their savings to be channelled to gold investment, according to Cuc.

Tran Phuong Binh, general director of DongA Bank revealed that bank deposit capital has indicated some stagnancy and even decline of several tens of billions per day in the recent times.

It is suggested that lending rates would have good grounds for being lowered thanks to mobilisation interest rate cuts so as to facilitate business operations in the end of the year. Yet, financial experts assume that dong interest rates gradually decreasing to the ceiling level would call for credit institutions to be aware of customers’ switching to other investment channels.

Tags: vietnam gold, Vietnam gold market, Vietnam gold prices