Vietnam Firms Shift to Dollar Loans Due to High Dong Lending Rate
Many businesses in Vietnam have decided to borrow loans in foreign currencies despite fluctuations as interest rates of dong loans have become so high.
Dollar loans currently have average interest rates of 5.5%-7% per annum and some banks promote dollar loans by offering very low rates of between 3.5% and 4.5%, compared to the actual dong lending rates of 15%-18% per annum.
Nguyen Quoc Sy, deputy general director of Western Commercial Joint Stock Bank, said that the majority of their customers taking out loans in U.S. dollars were exporters, who have the greenback to refund such loans.
“Importers have to consider taking out U.S dollars loans as they cannot control forex risks. Also, they can’t be sure that they can buy dollars from the bank for payment,” he said.
Nguyen Hoang Minh, deputy director of the Ho Chi Minh City branch of the State Bank of Vietnam, said the high credit growth had occurred because more enterprises were allowed to borrow foreign currency.
Statistics from the branch showed that dong deposits raised by credit institutions in HCM City fell 1.3% while those in U.S. dollar rose 1.77%. In addition, the dong credit growth decreased 0.35% as dollar loans rose 2.48%.
Commercial banks have raised the quoted dollar price, causing the dollar price to rise by VND20 to VND19,390-19420 per dollar on the free market.
The official interbank exchange rate announced by the State Bank of Vietnam on March 8 stayed unchanged at VND18,544 per U.S. dollar. Vietcombank quoted prices at VND19,070-19,100 per dollar, while it was VND19,050-19,100 late last week. (Saigon Economic Times)
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