SBV Deputy Governor Nguyen Thi Hong spoke with local media about the decision to cut interest rates on USD deposits.
Why was the decision made to reduce interest rates on USD deposits by organizations and individuals?
In directing and implementing policies over recent years the State Bank of Vietnam (SBV) has worked towards empowering the VND against the USD and following the government’s anti-dollarization policy.
The SBV therefore gradually cut interest rates on foreign currency deposit, to 0.25 per cent per annum for organizations and 0.75 per cent for individuals. This process, combined with the implementation of monetary policy, provided stability to money markets and foreign exchange in recent years.
Despite the market volatility, monetary factors and foreign exchange in Vietnam are basically stable, but some organizations or individuals speculate in foreign currency.
Therefore, the SBV decided to continue reducing interest rates, to zero per cent for organizations and 0.25 per cent for individuals. This is consistent with the orientation of the government, contributing to improving the attractiveness of the VND and reducing dollarization in Vietnam.
How is liquidity in foreign currencies in the banking system?
Foreign currency liquidity remains stable. The credit ratio on foreign currency deposits was only 80 per cent in 2011-2012 but is now at 100 per cent.
What is the orientation for monetary policy in the time to come?
The SBV will monitor macro-economic and currency developments to introduce tools and solutions to achieve monetary policy objectives with the aim of controlling inflation, ensuring macro-economic stability, and supporting economic growth.