State Bank stiffens rates

Photo - Le Minh

Under Decision No 2619/QD-NHNN issued today, the new base rate is 9 per cent, per year. The decision replaced the same decision issued a week ago to maintain the base rate as usual.

Decision No 2620/QD-NHNN also reads that the refinancing rate is 9 per cent, per year and discount rate is 7 per cent, per year. The overnight rate is also 9 per cent a year.

The raises display a new change in Vietnamese government’s monetary policy to start tightening its monetary policy to curb inflation rate and maintain value of Vietnamese dong against US dollar.

“The base rate is nominal rate for reference, and would not be rules on the market. We respect movements on the market to define the rate,” said Le Duc Thuy, chairman of the Committee for National Fiscal Surveillance.

The dong deposit interest rate is expected to rise to around 12-13 per cent a year from 11 per cent at present and credit interest rate will be around 15-17 per cent a year from more than 12 per cent currently.

Local banks are preparing for new rise in their rates next week. Some commercial banks in Ho Chi Minh City have already raised their credit interest rate by 2.5 per cent to 15 per cent as of November 5.

The committee report reads that credit growth rate was around 21.3 per cent by the end of October this year. Of which, Vietnamese dong credit growth rate increased by 14.6 per cent and dollar credit growth rate by 52 per cent in comparison with the figures in the beginning of this year.

BIDV, for instance, is to apply new rates from November 8. The bank’s deposit interest rate will be 12 per cent a year and the short-term credit rate will be 14 per cent a year. The short-term credit rate for supporting exports will be 12.75 per cent a year. The medium and long term credit rate will be around 15.5 per cent per year.