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VietNamNet Bridge – The low dollar deposit interest rates, the stable
dong/dollar exchange rate and the lower demand for dollar loans have all
prevented dollars from flowing into banks.
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Hang, an officer of a bank branch located on Nguyen Khanh Toan Street in Hanoi, has affirmed that the highest interest rate for dollar deposit is 2 percent. “If people deposit big sums of money, we would offer gifts. However, we cannot offer higher interest rates,” she said.
Local newspaper VnExpress has quoted an officer from Eximbank Hanoi as saying that the bank is running a program under which a lucky draw will be carried out to find out the luckiest depositors among those, who deposit 500 dollars and more for at least three months and commit not to withdraw capital before they become matured. However, the bank does not have any plan to increase the deposit interest rates for dollars.
The banker said that the deposit dollar interest rates have been staying at low levels (lower by 12 percent than the dong deposits), therefore, it is really less unattractive to deposit in dollars if compared with the dong. Therefore, banks all have reported the decreases of the dollar deposits.
Le Quang Trung, a senior executive of VIB Bank, said that the dollar capital mobilization growth rate so far this year is lower than that of the same period of the last year. The capital mostly comes from the public, while the deposits from businesses remain modest. Trung said that the new deposits are inconsiderable, while most of the capital is the old deposits which have been kept at the banks for a long time.
According to Trung, the dollar deposits have been increasing slowly because of the stabilization of the dong/dollar exchange in recent months. The stable exchange rate, the low deposit interest rates and the decreasing inflation rate all help ease the demand of people for keeping the dollar
Vo Thi Sanh, a senior executive of BIDV, said that since late September, the bank has not seen the considerable increase in the new dollar deposits.
“The dollar capital mobilized by the bank has decreased by 20 percent so far this year, while most of deposits are demand deposits,” she said.
In fact, the decreases in the dollar deposits do not worry commercial banks at all. The banks do not think that they need to do something to attract more dollar deposits now, because the demand for dollar loans has decreased.
Analysts say that the dollar lending interest rate is about 8 percent per annum, and if counting on the exchange rate fluctuation of 9.5 percent so far this year, the total interest rate would be 17.5 percent. Therefore, businesses do not find it attractive to borrow in dollars any more. Meanwhile, the dong/dollar exchange rate has been increasing continuously since early October, which means higher exchange rate risk for dollar loans.
Under the current regulations, in order to be able to borrow dollars, enterprises must prove that they have earnings in dollars to pay bank debts. Meanwhile, the earnings in dollars usually come in May and June, the high export season, while dollars do not come in big quantities in the last months of the year. Therefore, if borrowing dollars now, businesses would find it difficult to arrange dollars to pay debts. This, plus the more complicated procedures for borrowing dollars, has prompted businesses to stop borrowing in dollars.
Deputy General Director of a joint stock bank in Hanoi said that at this moment, if businesses need dollars, they would buy dollar definitely instead of borrowing dollars.
According to the State Bank, by August 19, the total deposits at banks had increased by 3.04 percent over the previous month. While the dong deposits had increased by 3.32 percent, while the foreign currency deposits only increased by 1.81 percent.
Source: VnExpress
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