Vietnam depositors switch to gold on rate caps

Local depositors were reported to withdraw their money from banks seeking for other higher yield investments such as gold.

The movement was most popular by end-September as the residents rushed to buy gold on attractive prices when domestic gold prices fell to VND43 million/tael, much lower than the peak of over VND49 million/tael.

A branch of local bank recorded as much as VND50 billion withdrawn for gold purchase, the local newspaper Thanh Nien quoted an unnamed CEO of the bank as saying. He also said that September deposits at the bank were some hundred billion dongs lower than that in August.

Total deposits in the banking system dropped by 1.07% MoM in September while total outstanding credits also fell by 0.9%, the SBV’s data showed.

The move was a response to the fact that the State Bank of Vietnam took measures to strictly enforce interest rate cap at 14% p.a. and newly set 6% per annum for deposits under 1 month term.

The decrease in VND deposit rates and the expectation of further gold price hike prompt investors to withdraw their deposits to purchase gold.

Source Sophie/ News Writer/ StoxPlus

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

Posted by VBN on Oct 12 2011. Filed under Banking-Finance, Gold. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry