SBV’s move on USD interest rate eases pressure on market

The State Bank of Vietnam (SBV)’s latest move on lowering the USD deposit interest rates is expected to ease the pressure on the foreign currency market, finance-banking experts said.

The SBV’s decision, which took effect on September 28, reduced the annual interest rate for USD deposits from organisations to zero from the current 0.25 percent while the interest rate for deposits from individuals dropped to 0.25 percent from the current 0.75 percent.

Lecturer Tran Van Thuan from the University of Finance –Marketing of Ho Chi Minh City said recently there is a trend of converting savings in the domestic currency to USD, while businesses try to buy and keep USD in anticipation of exchange rate fluctuations at the end of the year or early next year. 

Therefore, the adjustment of USD saving interests could lower the pressure on foreign currency demand and supply, and is a suitable monetary policy instrument at the moment, Thuan said, adding that the move will help stabilise the exchange rate of VND and USD.

Meanwhile, General Secretary of the Banking Association Tran Thi Hong Hanh said the adjustment will help stabilise the country’s monetary market and prevent speculation while ensuring capital mobilisation for manufacturing and business activities.

Following the SBV’s decision, commercial banks including the Bank for Investment and Development of Vietnam (BIDV) and the Military Bank (MB) immediately adjusted the interest rates on USD deposits. 

Gold prices have not changed much after the SBV’s adjustments, with the price listed at the Sai Gon Jewelry Company on September 28 afternoon dropping 80,000 VND per tael from late last week’s level.

Meanwhile the green notes were transacted at the same price as last week. Currently, the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) has its USD price at 22,445-22,505 VND for 1 USD (buying-selling).-VNA