Vietnam Currency Discussion Board

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Vietnam money: Fund surplus keeps dong rates stable


Vietnamese dong rates held steady on Monday as banks reported a growing surplus of funds, in part the result of investors selling stocks and depositing the cash, bankers said.
The central bank has said it would step up draining dong from the system in coming months to curb inflation. The annual rate jumped to 8.4 percent in July from 7.8 percent in June.

Four state-run banks, the country's key lenders, kept their overnight lending rates on the dong unchanged from a week ago at 3.0-4.0 percent.

Their six-month rates eased to between 7.2 percent and 8.6 percent from 7.6 percent to 8.7 percent last Monday.

"Commercial banks now have a relatively high surplus of funds as deposit growth is higher than lending growth," Nguyen Ngoc Bao, director of the State Bank of Vietnam's Monetary Policy Department, told the Lao Dong (Labor) newspaper in an interview published on Thursday.

The bank aims to take this temporary surplus out without raising interest rates, he said.

In the week ending July 28, the central bank took VND18 trillion (US$1.12 billion) out of the banking system by issuing short-term debt in open market transactions. That was up from VND11 trillion the previous week, central bank data showed.

Banks in Ho Chi Minh City, Vietnam's commercial center, reported January to July deposits surged 65.7 percent from a year earlier to VND377.51 trillion ($23.4 billion), while loans surged 48.4 percent to VND291.02 trillion ($18 billion).

Higher deposits resulted from stock investors unloading shares and depositing cash in banks, the official Vietnam News Agency reported.

Vietnam's main stock market, the Ho Chi Minh Stock Exchange, has lost nearly 10 percent over the past month, its index falling to 925.44 on Monday from 1,024.68 on June 29, partly due to increased share offerings on the market.

Many listed firms have announced plans to raise funds via share issues to expand investment. Major shareholders in large companies have also disclosed plans to sell part of their holdings.

The central bank set the dollar/dong exchange rate at 16,140 on Monday, having allowed the dong to ease 0.24 percent from the end of 2006.

Source: Reuters

http://www.thanhniennews.com/business/?catid=2&newsid=30513