Vietnam’s benchmark five-year bonds on Friday rose for a third day, pushing the yield to the lowest in more than a week, on speculation falling money-market rates increased demand from lenders. The dong strengthened. The overnight interbank deposit rate fell 97 basis points to 4.41 percent on Friday, its lowest level in two weeks, according to data from banks compiled by Bloomberg. The measure has declined 199 basis points since June 26. A drop in the rates at which banks lend to each other makes returns from government debt relatively more attractive. “That’s a buying signal,” said Tran Kieu Hung, a Hanoi- based bond trader at Bank for Investment & Development of Vietnam. “Demand for bonds has increased.” The yield on five-year bonds fell four basis points, or 0.04 percentage point, to 9.73 percent, according to a daily fixing rate from banks compiled by Bloomberg. The yield dropped eight basis points this week, the first seven-day decline … [Read more...] about Vietnam bonds rise as falling money-market rate spurs demand
25 year refinance rates
The State Bank of Vietnam (SBV) said on Monday it is lowering the refinance rate, at which it lends the Vietnamese dong to banks, to 6.5 percent from 7 percent, and reducing the discount rate to 4.5 percent from 5.0 percent. The central bank is also cutting the ceiling on interest that banks can offer on dong deposits to 6.0 percent per year from 7.0 percent, which has been the maximum since June. The new rates take effect on Tuesday. Monday's monetary policy moves follow similar ones last year to help stabilise the currency and control inflation. Still, most economists say Vietnam has not allowed anywhere near the level of liberalisation and reform that's needed to let the country reach its growth potential. The ceiling on dollar deposit rates will be cut to 1.0 percent from 1.25 percent. Ceilings on dong loans extended to businesses dealing with agriculture, exports and to small- and medium-sized firms are being lowered to 8 percent from 9 percent. The SBV indicated that … [Read more...] about Vietnam cuts key interest rates in bid to spur fastest growth
The government is likely to heed advice from a parliamentary commission to cut interest rates further, hoping to meet its credit growth target, but analysts warn an increase in lending is not a given. In a report published Tuesday, the National Financial Supervisory Commission under the National Assembly expressed concern over the slow growth of credit, saying Vietnam will find it hard put to meet the target of 12 percent set for this year. It said that as of April 29, credit had increased by just 2.11 percent from the end of last year, meaning that to meet the year's credit growth target, it would have to increase by at least 1.25 percent every month. This is an "extremely difficult" mission, given that local businesses' capacity to absorb funds is still limited, the properly market is stagnant and the global economy is weak as well, the commission said. Therefore, it is essential that the lending rate is reduced to around 10 percent a year so businesses are encouraged to take … [Read more...] about Can further rate cut boost lending?
The latest cut to deposit rates on March 26 will allow them to lower their lending rates further, but banks say they are no longer to blame for a sluggish economy. Businesses are struggling because of low consumption and lack the confidence to take loans, they say. The maximum deposit rate was cut 8 to 7.5 percent by a central bank order after official statistics showed the consumer price index in March down by 0.2 percent from the previous month. Representatives of leading banks said analysts have been talking on the media about the deposit cut days before it took effect, but they have not experienced major withdrawals, maybe because other options like gold, property, foreign exchange and stocks are not very attractive right now. Nguyen Phuoc Thanh, general director of Vietnam's third biggest lender, Vietcombank, told Thoi Bao Kinh Te Saigon Online that he was prepared for a wave of withdrawals, but there was nothing significant. Some bankers say the only change so far is that … [Read more...] about Latest rate cut fails to perk up businesses
Vietnam's central bank aims to get commercial bank lending rates down to between 17 percent and 19 percent, perhaps from next month, its new governor was quoted as saying in an online report, which helped lift stock prices. Dong rates averaged 18.64 percent in July, with loans for the agricultural and export sectors at 16-21 percent, other production and business activities at 18-22 percent and non-manufacturing sectors at 20-25 percent, the central bank said in a monthly report on Wednesday. … [Read more...] about Vietnam aims to cut bank lending rates: report