State Bank keeps prime rate at 9 per cent

December 01, 2010 | 13:22

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The State Bank of Vietnam has decided to hold the prime interest rate for the Vietnamese dong at 9 per cent for at least one month.

The discount rate remained unchanged at 7 per cent, while the refinancing and overnight interbank rates stayed at 9.

Earlier this month, the central bank raised the interest rate by 1 per cent to 9 per cent per year, the first increase in 11 months, following announcements of no dong-devaluation and seven measures to try to cool inflation in the closing months of the year.

Annual inflation in Vietnam hit 11.09 per cent year -on- year in November, a 15-month record high as food prices soared after severe flooding in the central area killed scores of people and washed away crops and homes. Consumer demand also increased in the run up to Lunar New Year.

The consumer price index (CPI) is estimated to have risen 1.86 per cent from October.

The latest CPI suggests that the average annual inflation, which the government had targeted at 8 per cent or less, may unavoidably be in the double digits.

Meanwhile, small commercial banks have hiked deposit rates to 13-14 per cent to attract customers who are seriously worried about the weakness of the dong.

Western Bank, Maritime Bank and HDBank are offering 13.5 per cent interest for one and two month term deposits while Saigonbank, SHB, SeAbank, and Western Bank are offering 13.4-13.6 per cent for mid-term deposits.

Large deposits may also receive a 1-2 per cent bonus.

At the same time, borrowing rates rose to 18-21 per cent per year.

Despite the central bank's attempts to cool the US dollar, the greenback remains expensive on the streets, rising to VND21,400-21,450, up VND100 on Sunday.

VNS

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