Strengthening Dong likely boost up Dollar credits

It is likely that the chronologically strengthening dong will help boost up dollar credits, widening the gap between dong and dollar credit growth and posing risks to banks, the local newswire Tamnhin.net reported.

It is likely that the chronologically strengthening dong will help boost up dollar credits, widening the gap between dong and dollar credit growth and posing risks to banks, the local newswire Tamnhin.net reported, citing the Vietnam Banks Associations’s concerns.

The average inter-bank exchange rate on June 14 was VND 20.618 per dollar in the inter-bank market, the lowest level since the SBV devalued the dong by 7% on February 11 thanks to improvement in the forex market, local banks’ forex status and sluggish trading in the black market, local media reported.

Recent statistics showed that local enterprises have turned to prefer borrowing dollars to the dong, it said, cited that as of May 23, dollar loans surged 18.9%, while dong loans only edged up by 2.59%.

Soaring dollar credit growth will pose risks to the banking system and the whole economy, local media reported, pointing out that when dollar loans come due at the same time, it will put pressures on exchange rates. – Stoxplus.com

Tags: Vietnam banking industry, vietnam dong, Vietnam finance, Vietnam financial

Posted by VBN on Jun 15 2011. Filed under Banking-Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry