Borrowing costs face upward pressure

Interest rates increased sharply in the interbank market in the last few weeks of December 2013, revealing a huge demand for liquidity at banks.
Interest rates increased sharply in the interbank market in the lastfew weeks of December 2013, revealing a huge demand for liquidity atbanks.

According to the State Bank of Vietnam, in the last weekof the month, VND transactions on the interbank market were worth 128.47trillion VND (6.12 billion USD), most of them for overnight (48percent) or one week (29 percent).

But the interest rates on bothVND and USD borrowings have risen sharply. It was 0.79 percentagepoints up from the previous week for dong loans at 2.23 percent peryear.

However, they did not come as any surprise since a rising trend had begun several weeks earlier.

Demand for cash often increases at the end of the year as people need more money to do shopping.

Besides this, the central bank has also been pumping money through open market operations (OMO).

By December 27, it had injected 14.73 trillion VND (701.43 millionUSD) during the month. In previous months the flow had been negative tothe extent of 102 billion VND (4.86 million USD).

Clearly, thecentral bank is ready to intervene in the market to prop up the bankingsystem's liquidity and keep the interbank market stable.

Not surprisingly, banks have also begun a new race to increase deposit interest rates.

Sacombank offers the ceiling interest rate of 7 percent – applicablefor deposits of up to six months – for one to five months, and 7.3percent for six to 11 months.

Asia Commercial Bank offers 6.9 percent for deposits of one to two months. Eximbank offers 8 percent for a one-year term.

Some small banks in Hanoi are ready to offer 9 percent for a year on deposits of 200 million VND (9,529 USD) or more.

With the deposit rates rising again, lending rates are likely to be under pressure too this year.

A senior economist said besides the rising deposit interest ratesthere are also other reasons that would keep loan interest rates fromfalling in 2014.

They include a predicted inflation rate ofaround 7 percent, meaning the coupon rates on Government bonds have beenfixed at a level that banks find attractive.

The US dollar is likely to strengthen, affecting the interest rates and exchange rates, he added.-VNA

See more

NCSoft and VNGGames sign a cooperation agreement to develop products in Southeast Asia. (Photo: VNG)

More RoK’s game developers target Vietnam

Over half of Vietnam's nearly 100 million population being gamers and the country's competitive labour costs are among reasons for Korean gaming firms' expanding presence in Vietnam.

Representatives from the Vietnamese Embassy in the UK, LHR leaders, airline partners, and passengers at the anniversary event (Photo: VNA)

Vietnam Airlines marks 10 years of UK route operations

Vietnam Airlines launched its direct UK route in 2011, initially operating from London Gatwick Airport (LGW) before transitioning to Heathrow in 2015, improving connectivity to one of the UK’s major international hubs./.

President of the Cuban Chamber of Commerce (CCC) Antonio Luis Carricarte Corona. (Photo: VNA)

Cuban commerce official optimistic about bright future of Vietnam-Cuba cooperative ties

President of the Cuban Chamber of Commerce (CCC) Antonio Luis Carricarte Corona hailed Vietnam as Cuba’s second-largest trading partner in Asia and its top investor, spotlighting its foothold in the Mariel Special Development Zone via Viglacera. This zone, he noted, is set to become a pivotal hub for Vietnamese investment in the years ahead.

Imported cars seen at the northern port city of Hai Phong. (Photo: VNA)

Ministry proposes tax cuts for some imported cars

This initiative aims to diversify the supply of imported vehicles, foster competition in the domestic market, and align Vietnam’s tax policies with the evolving trends of the automotive industry.

Minister of Industry and Trade Nguyen Hong Dien and Deputy Prime Minister of the Republic of Belarus Anatoly Sivak sign the meeting minutes. (Photo: VNA)

Vietnam, Belarus unveil key solutions to boost trade

Vietnam and Belarus are set to deepen bilateral cooperation in all fields, particularly in economy-trade and science-technology, through their Intergovernmental Committee mechanism, affirmed Minister of Industry and Trade Nguyen Hong Dien.

Honda Vietnam's new CEO, Sayaka Hattori (Photo: VNA)

Honda Vietnam has new female CEO

Sayaka Hattori, a Japanese national with over 25 years of experience in the automobile and motorcycle industry, was appointed as new CEO of Honda Vietnam on April 1.