Central Bank raises prime rate to 9 pct

The State Bank of Vietnam decided November 11 to raise the prime interest rate for dong deposit accounts to 9 percent per annum after keeping it at 8 percent for nearly one year.

Transactions conducted at a Sacombank branch in Ho Chi Minh City

Under the decision, which took effect on November 5, other interest rates were also adjusted.

The refinance interest rate is set at 9 percent per annum and the re-discount rate at 7 percent. The overnight rate in inter-bank electronic payments, and the rate of loans to finance balances in clearing transactions between the State Bank and commercial banks are all 9 percent per annum.
Le Duc Thuy, chairman of the National Financial Supervisory Commission, said the Government discussed the rate at a meeting on November 3.
He said GDP for this year is estimated to hit or maybe exceed the target, while the consumer price index is prone to increase. If the low rate is maintained, the Vietnamese dong will be devalued against the US dollar.
Therefore, the Government decided to let banks to adjust their rates according to the market though it asked commercial banks to slash their rates few months ago, he added.
Mr. Thuy said interest rates might go up but not sharply for they have to be suitable with the market demands, and they won’t create a high impact on the economic growth and consumption much.
“According to my estimation, if the deposit rate rises, it will be only 12-13 percent. And the lending rate of 15-17 percent is acceptable on the market. Present interest rates are not much lower than these rates, therefore, rates will not rise much,” he added.

By Ham Yen – Translated by Hoang Yen

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