HANOI, Nov 15 (Reuters) - Interest rates in Vietnam soared over the past week after the central bank signaled tighter monetary policy to curb inflation and stabilise the foreign exchange market.
Banks were offering deposit rates of 12-13 percent on Monday, up from 11 percent early this month, lenders’ websites showed. The rates jumped to 14-15 percent last Wednesday while loans were available at 17-18 percent, before falling to 16-17 percent this week. Interbank rates soared to 23-24 percent at times last week, tripling from a month earlier, Sai Gon Giai Phong newpaper said.
Businesses said profits would be eroded by higher lending rates as well as the weakening dong, which has pushed up prices of imported materials.
Saigon Co.op, a major retail chain in southern provinces, will have to revise its earnings estimate this year, Bui Hanh Thu, deputy director of the chain, was quoted as saying in the Sai Gon Giai Phong newspaper. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
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The market moves came along with the government’s shift from boosting economic expansion to curbing inflationary pressures and calming the foreign exchange market.
Le Duc Thuy, chairman of the National Financial Supervisory Commission, said earlier this month the central bank would “leave interest rates for the market to decide”, instead of urging lenders to bring them down. [ID: nSGE6A30C4]
Falling interest rates had contributed to pressure on the dong as depositors withdrew their savings in a rush for U.S. dollars.
The central bank raised the benchmark base rate to 9 percent from 8 percent on Nov 5, the first move since last December. [ID:nSGE6A4048]
But the central bank did not expect the deposit and lending rates to rise so swiftly, economists said.
The central bank has also vowed to speed dong cash injections via the open market operations, saying it had injected 50 trillion dong ($2.5 billion) into the system during the last three days of last week, the Vietnam Investment Review reported.
MARKET SUMMARY - Nov 15 Nov 8 Change (pct) VND onshore interbank quotes VND=VN 19,495 19,480 -0.08 VND unofficial VNDUNOFF= 20,900 20,600 -1.46 Ho Chi Minh Stock Exchange index .VNI 433.54 457.13 -5.16 Hanoi Stock Exchange index .HNXI 98.48 109.73 -10.25
- Vietnam has abolished the import duty on gold in another effort to cool domestic prices of the metal after it has granted gold import quotas earlier in the week. [ID:nHAN122981]
- Vietnam’s central bank took steps to cool domestic currency and gold markets by announcing it would allow “reasonable” gold imports and begin selling dollars to banks that requested them. [ID:nSGE6A8086] (Reporting by Ngo Thi Ngoc Chau; Editing by Kim Coghill)
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