Individual and organization deposits both cut, the latter to 0%.
From September 28 the maximum interest rate paid to individuals depositing USD at banks will be 0.25 per cent per annum while organizations making similar deposits will not receive interest. Prior to the change the maximum interest rate for individuals was 0.75 per cent per annum and 0.25 per cent for organizations.
The State Bank of Vietnam (SBV) said that deposits made prior to the decision taking effect on September 28 will be subject to the previous interest rate regime until the term expires. In cases where the term has expired but interest is still to be paid the new rate will apply.
The SBV explained that the decision is aimed at preventing any hoarding of foreign currency and will contribute to effectively implementing measures on monetary policy and banking activities over the final months of 2015.
The cut to USD interest rates was made in expectation of USD exchange rates fluctuating globally.
The central bank has recently confirmed that there will be no further adjustments to the VND/USD exchange rate until the end of the year or early 2016. According to the SBV the current rate is flexible enough to defend against negative fluctuations in the exchange rate in Vietnam and globally. In August it devalued the VND by 1 per cent and expanded the exchange rate band at commercial banks from +- 1 per cent to +- 3 per cent.