The State Bank of Vietnam announced yesterday that lending interest rates on the interbank market had stabilized during the last week thanks to an increase in funds available to commercial banks and credit institutions. The exchange rate between the U.S. dollar and the dong rose sharply.
The central bank began to discount paper from commercial banks and institutions last week. This was seen as a measure to allow state and private commercial banks and credit institutions to increase their funds.
Thanks to an increase in available funds, lending interest rates on the interbank market are dropping. The overnight lending rate slid down to between 5- 7 percent a year.
Foreign banks are offering sweep accounts that pay between 3 percent and 4.5 percent a year.
The rate for 12-month saving certificates from state commercial banks fell to 13.13 percent while those of private bank fell to 11.78 percent.
The interest rates set by state commercial banks for short-term loans were 14.6 percent, medium and long –term loans between 13.5 and 16.2 while private commercial banks offered an interest rate of 18.42 percent for short-term loans and 21.85 percent for medium and long-term loans.
In an effort to stabilize the market, the central bank announced that it will continue to discount seven-day certificates from commercial banks at the rate of nine percent.
Also on the same day, the dollar/dong exchange rate rose sharply. The buying price of the dollar was VND16,080 while the selling price was VND16,120.
The dollar was bought for VND16,170 and sold for VND16,220 on the free market, an increase of three percent over March 23.
The strength of the dollar suggests that the supply of foreign currency no longer exceeds demand.
Analysts credited the increase in demand for foreign currencies on purchasing by the commercial banks.