Customers should be cautious in dollar withdrawals

A deficit in rate on US dollar deposits have led depositors that are being paid at lower rates to withdraw all their savings to deposit in ones, which pay higher.

A cash teller of a HCMC-based lender counts a pile of US dollar notes. Dollar sales at banks surged after the authorities strengthened inspections of the so-called black market (Photo: Minh Tri)

Financial experts, however, warn that they will likely to suffer heavy losses if they are not cautious.

A woman, identified only as T, says her bank informed that the rate on the greenback deposits dropped to 2 percent per annum and offered her a rate on negotiable basis, which amounts to 2.5 percent per annum.

“As the rate is too low compared with other banks’, I determined to withdraw all of my saving worth US$8,000 to deposit to another lender in Ho Chi Minh City’s District 3, which offers me a rate of 3 percent per annum,” T recalls.

“A cash teller from the bank in District 3 showed me a $100 banknote, which she found a blur on it while counting the amount of money that I had withdrawn from the previous bank.

“I asked the teller to buy back the note at a lower price, but the teller said the bank have no policy on buying banknotes of foreign currencies that are worn, torn, damaged or no longer in circulation. She suggested that I should sell the note for retail gold shops.”

T then returned to the last bank to ask for an exchange, but cash tellers denied that they gave her the blurred note, according to the woman.

“Lenders have to send damaged banknotes of foreign currency to foreign banks to ask for an exchange, which costs time and money. Therefore, they hesitate to buy,” says a director of a HCMC-based bank, who asks not to be named.

Banks, meanwhile, are willing to change the dong banknotes that are worn, torn, damaged or no longer in circulation with an exchange fee, he adds.

Analysts say people will sell dollars to the unofficial currency market due to banks’ hesitation in buying back damaged banknotes of foreign currencies.

According to the HCMC branch of the central bank, dollar sales at banks surged after the authorities strengthened inspections of the so-called black market, forcing it to shrink.

Since early this year, Vietnam has cracked down hard on illegal dollar hoarding and trading in an effort to stabilize the currency market.

The State Bank of Vietnam lowered the ceiling on dollar deposit rates last month in its latest attempt to limit the circulation of the US currency in the economy, which is struggling with a widening trade deficit and stubbornly high inflation.

The central bank cut the dollar deposit rate on bank deposits by individuals to 2 percent from 3 percent offered widely previously.

That ceiling applies to deposits by individuals, while the rate cap for institutional deposits is 0.5 percent, the state bank said on its website (www.sbv.gov.vn), citing a circular issued on June 1.

By Diu Ngan – Translated by Vu Minh

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