The State Bank of Vietnam (SBV), or central bank, issued a decision on June 10 to raise the base interest rate for Vietnam dong to 14 per cent from current 12 per cent. The new interest rate will be applied from on June 11.
Central bank will also raise the re-financing rate to 15 per cent per annum from 13 per cent and the discount rate to 13 per cent to 11 per cent. Credit institutions are required to limit their deposit and lending interest rates below 150 per cent of the base interest rate.
The central bank decided to hike the rates based on higher interest level at present in the monetary market in comparison to May and on forecast about high inflation, about demand and supply of capital and exchange rate in coming time.
The move is aimed to tighten monetary policy to curb inflation and stabilize macro economy.
This is the third times this year the SBV has raised the base rate. It hiked the rate from 8.25 per cent to 8.75 per cent in January and to 12 per cent on May 19.
The SBV also issued a document, asking credit institution not to collect any fees related to their loans.
On the same day, the bank decided to raise the VND/USD exchange rate to VND16,461 from VND16,139 with trading band on the interbank market maintained at ±1 per cent, meaning that credit institutions are allowed to trade the U.S dollar between VND16,296 and VND16,626.
The SBV reiterated that it will make intervention to ensure liquidity for the market.
Vietnam’s central bank announces the base interest rate periodically based on deposit and lending interest rates of a representative group of banks, interbank, rediscount and refinance interest rates and especially CPI.
The country’s consumer price index in May is reported to rocket 25.2 per cent on year.
In the week ending June 6, local state-owned banks were offering lending interest rates for Vietnam dong at 15.6 per cent-18 per cent per annum for short term and 17 per cent-18 per cent for medium and long terms, while joint stock lenders were providing the rates at 14.8 per cent-18 per cent for short term and 16.8 per cent-18 per cent for medium and long terms.
The deposit interest rates were popular at 12.71 per cent for three months, 12.97 per cent for six months and 13.39 per cent for 12 months at state-owned banks and at 14.16 per cent, 14.23 per cent and 14.19 per cent a year at joint stock banks, respectively.
Interbank lending interest rates were ranging between 14 per cent and 18 per cent per annum. (Securities Investment, Vietnam Financial Times)
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