+ In the context of dramatic increase of the VND mobilizing rates for four days during December 7 – 10, which caused psychological concern, money transfers among credit institutions and market instability, the Governor of the State Bank of Vietnam (SBV) issued Document No. 9779/NHNN-CSTT dated December 14, 2010 to require credit institutions to fix the interest rates (The rates for deposits and valuable papers…) including promotional expenses at the maximum of 14% p.a. (Effective from December 15, 2010) and adjust from time to time the rates in a downward trend in line with inflation movement and capital supply and demand. Since December 15, most commercial banks have decreased their mobilizing rate to the maximum of 14% p.a, down by 2-3 percentage points p.a as compared to the previous week. Most credit institutions refrained from promotion programs with cash and interest rate bonus. The mobilizing rates quoted by commercial banks were commonly 13.5 – 14% p.a, mainly for below 3 month terms.
1. Mobilizing and lending rates:
- The VND interest rates:
+ The lending rates were commonly 12.5% – 14.5% p.a for agricultural and rural development and exporters, 15-18% p.a for other productive and business enterprises, and 18-20% p.a for the non-productive sector.
- The USD interest rates were stable as compared to the previous week.
+ The mobilizing rates were 0.2-0.5% p.a for demand deposits, 3.5-5.2% p.a for below 12- month deposits, and 4.2-5.6% p.a for over 12- month deposits.
+ The lending rates were commonly 5.5-6.5% p.a for short terms, and 6-8% p.a for medium and long terms.
The specific mobilizing and lending rates were as follows:
2. Transactions turnover:
According to the express reports of commercial banks (45 – 55 commercial banks per day)by December 15, the total amount of transactions in the inter-bank market reached about VND 115,495 billion and USD 3,833 million, i.e. VND 23,099 billion and USD 767 million per day averagely.
Most transactions in VND were short terms (Overnight and 1 week). The amount of overnight transactions in VND reached 52,252 billion, accounting for 45% of the total amount of VND transactions of the whole week. The amount of overnight transactions in USD reached 2,288 million, accounting for 60% of the total amount of USD transactions.
3. The average inter- bank interest rates:
The interest rates by December 15 were as follows:
- For the rates in VND, the average VND interbank interest rates increased for most terms, of which the rates of overnight, 6 and 12 month terms experienced the clearest increase, up by 1.56, 1.76 and 1.12 percentage points, respectively. Other rates rose by 0.05 – 0.58 percentage points. The rates for 2 week and 3 month terms slightly declined.
The average overnight interest rate was 12.89% p.a, up by 1.56 percentage point as compared to the previous week. The other rates ranged between 13% - 13.5% p.a. The highest average rate was 13.45% for 6 month term.
- For the rates in USD, the average interest rates in USD increased for overnight, 1 and 3 month terms, up by 0.02, 0.17 and 0.59 percentage points respectively; the other rates decreased as compared to the previous week, of which the rates for 1 and 2 week terms slightly decreased; the average rates for 12 month term was down to 3.25% from 2.60% p.a (by 0.65 percentage point). The average overnight rate was 0.54% p.a; the other rates ranged between 0.88% - 2.60% p.a.
There was no transaction in USD for 6 month term. There were a few transactions for 12 month term.
The average interest rates in the inter-bank market were as follows (% p.a.):
The foreign exchange market showed positive signs. The foreign exchange liquidity was improved. Commercial banks could buy foreign currencies from the market and sold to their customers. Especially, exporting enterprises had sold foreign exchange revenue to commercial banks. The SBV continued to sell foreign currencies to meet the demand for the importation of essential commodities. The VND/USD rates were commonly quoted by commercial banks at 19,480-19,500.
The domestic gold market was gradually stable, and the domestic gold price did not show extraordinary signs of increase. The difference between the world and domestic gold price was no longer significant.