Credit grew by just 0.43 percent in January, slowing from December's 2.28 percent pace, the State Bank of Vietnam announced on its website on Feb. 15.
Modest dong credit growth at commercial banks in January was blamed on high interest rates which had encouraged borrowers to seek dollar loans at more modest rates. As a consequence, credit in US dollars expanded by 2.37 percent in January.
The pattern was an exaggeration of the situation in January a year earlier, when dollar credit growth reached 14.07 percent while dong credit growth stagnated.
Lending interest rates for dong-denominated loans for consumers or to finance real estate or securities investments ranged as high as 18-20 percent per year in January, while rates for loans to exporters or to enterprises in rural areas were only slightly more competitive, at 14-16 percent per year.
Meanwhile, interest rates for dollar-denominated loans averaged 6.37 percent per year in January.
The State Bank of Vietnam has targeted credit growth this year at 23 percent, a modest easing from last year's credit growth of 27.6 percent.
Other indicators for the dong were all down in January. Total dong deposits in the banking system were down 4.12 percent from the previous month, even as dollar deposits rose by 4.43 percent.
Overnight deposit rates in January rose to 11.2 percent per year on average in January, from 10.5 percent in December, as inflation pressures increased and bank liquidity tightened before the recent Tet (lunar new year) holidays.
The State Bank of Vietnam kept the prime rate unchanged at 9 percent but increased its seven-day reverse repo rate to 11 percent on January 10, up from 9 percent in mid-December.
Government bond yields in January also rose to their highest levels since last May.
The State Bank injected 132 trillion VND (6.3 billion USD) into the nation's banking system in January 30 to support liquidity and payment demand. /.
Modest dong credit growth at commercial banks in January was blamed on high interest rates which had encouraged borrowers to seek dollar loans at more modest rates. As a consequence, credit in US dollars expanded by 2.37 percent in January.
The pattern was an exaggeration of the situation in January a year earlier, when dollar credit growth reached 14.07 percent while dong credit growth stagnated.
Lending interest rates for dong-denominated loans for consumers or to finance real estate or securities investments ranged as high as 18-20 percent per year in January, while rates for loans to exporters or to enterprises in rural areas were only slightly more competitive, at 14-16 percent per year.
Meanwhile, interest rates for dollar-denominated loans averaged 6.37 percent per year in January.
The State Bank of Vietnam has targeted credit growth this year at 23 percent, a modest easing from last year's credit growth of 27.6 percent.
Other indicators for the dong were all down in January. Total dong deposits in the banking system were down 4.12 percent from the previous month, even as dollar deposits rose by 4.43 percent.
Overnight deposit rates in January rose to 11.2 percent per year on average in January, from 10.5 percent in December, as inflation pressures increased and bank liquidity tightened before the recent Tet (lunar new year) holidays.
The State Bank of Vietnam kept the prime rate unchanged at 9 percent but increased its seven-day reverse repo rate to 11 percent on January 10, up from 9 percent in mid-December.
Government bond yields in January also rose to their highest levels since last May.
The State Bank injected 132 trillion VND (6.3 billion USD) into the nation's banking system in January 30 to support liquidity and payment demand. /.
