Interest rates likely not ease much in short term

It is likely that interest rates won’t ease much in the short run on concerns over inflation and , the online newspaper Dau Tu Chung Khoan reported June 7.

Dong deposit interest rates remain tense despite cooling down inflation, the DTCK reported, citing that all deposit interest rates for one-week to under 12-month terms were raised to the cap of 14% p.a and many banks still offer promotions, gifts and negotiable interest rates to lure depositors.

Meanwhile, lending interest rates at non state banks and small joint stock banks are still “very high”, ranging between 23% p.a. to 27% p.a., mostly for consumption loans, home and car purchase loans, etc., while Vietinbank, BIDV and other state-owned lenders charge the dong lending interest rates of 20-21% p.a.

Although negotiable interest rates for big deposit amount fell to 17% p.a. from 20% p.a., some analysts were concerned that interest rates haven’t shown any dipping signals as Consumer Price Index is still at “high level”.

Cash flow into the banking system was inconsiderable though the State Bank of Vietnam (SBV) bought $1.2 billion dollars for about VND25 trillion in May, the local media added.

The central bank’s moves to cut dollar deposit interest rate caps, raise dollar reserve requirements and ask state firms to sell dollars will boost up commercial banks’ demand for the dong to buy dollars, making it hard for interest rates in short term – Stoxplus.com

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial, Vietnam interest rates