Deposit interest rate cap to be likely removed

Deposit interest rate cap to be likely removed

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Nhan Dan/VNA – The State Bank of Vietnam (SBV) has said it will consider adjusting the interest rate and the purchase of additional bad debts in the near future at a press conference on February 28.

Head of the SBV Monetary Policy Department Nguyen Thi Hong said that once macroeconomic stability and sound liquidity are achieved, the central bank will consider removing the deposit interest ceiling. The current cap for six-month deposits is below 7%.

In the sequent months, the SBV will continue to require local credit institutions reduce annual lending rates to below 13% and housing loans to 5%, down 1% from last year.

The bank official also noted Vietnam’s foreign exchange market and rate of exchange were stabilised in the first two months of this year.

SBV has purchased a large amount of foreign currencies to add to the national foreign currency reserves. By February 26, local commercial banks had posted the exchange rate between VND and US dollar at VND21,080 – VND21,120 per US dollar.

Meanwhile, the Vietnam Asset Management Company (VAMC) has purchased over VND39 trillion (US$1.8 billion) in bad debts from 35 domestic commercial banks and issued special bonds worth VND 31 trillion (US$ 1.45 billion), said VAMC Vice President Nguyen Quoc Hung at the event.

Now, the State-owned company is considering the additional purchase of VND7 trillion (US$ 329 million) in bad debts and targets VND10 trillion (US$ 473 million) in the first quarter of this year.

Head of the SBV Monetary Policy Department Hong asserted that the bank this year would continue to adjust its monetary approach in flexible coordination with fiscal policy in a bid to curb inflation and ensure appropriate growth.

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