Vietnam to Tighten Lending in Foreign Currencies
The State Bank of Vietnam, the country’s central bank, has issued a decision on narrowing criteria of foreign currency borrowers in order to reduce dollar shortage and dollarization in Vietnam.
The decision No.9 issued April 10 regulates that credit institutions will provide foreign currency loans for resident customers who make foreign currencies only for import payments, repayment of foreign debt and investment abroad.
The new decision encouraged banks to lend foreign currencies for producers of export goods, for Vietnamese laborers working overseas, for the government’s investment projects and for businesses in need of capital.
It is expected to help banks ease the shortage of dollar.
Many banks have recently cried over the serious lack of foreign currencies due to increasing borrowing demands for import upsurge and fluctuations between USD and VND exchange rates. They faced difficulties in balancing deposits and loans in the first three months.
Local newspapers said the USD/VND exchange rates are increasing after Vietnam has poured more than US$1.2 billion to import about 40 tons of gold since the beginning of this year.
In addition, several exporters have recently borrowed dollars to benefit from a rate lower than the lending rate in Vietnam dong and then sold the greenback to banks in exchange for dong funds, adding to higher demand for dollars.
(Vietnam Economic Times, SBV, VietnamNet)
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