The State Bank of Vietnam (SBV) has taken long-awaited moves to adjust the inter-bank rate for the US dollar and cut the deposit rates to reduce the input cost for the economy.
The central bank on late Thursday afternoon raised the inter-bank rate for the US dollar by 1 percent to VND21,036 per dollar, after leaving it unchanged since December 24, 2011.
With the new inter-bank rate for the greenback, which will be applied starting Friday, dollar-per-dong transaction rates between local banks can move within the range of VND20,826 and VND21,246 dong per dollar.
"The adjustment in the inter-bank rate for the greenback will reflect the supply and demand of the foreign currency in the market more precisely, helping stabilize the local foreign exchange market,” said the central bank in a statement recently posted on its official website.
“SBV will take all necessary measures to ensure the stability of the exchange rate.”
The local foreign exchange market has recently been stirred by the unofficially raised forex rate of the greenback quoted at almost all local joint stock and state-run commercial banks.
SBV has also cut the depositing rates for the Vietnam dong by 0.5-0.8 percentage points and US dollar by 0.25-0.75 percentage points.
On the same day, the central bank also announced the reduction of interest rates on deposits in Vietnam dong and US dollars and the lending rates for some prioritized economic sectors starting Friday.
Accordingly, the maximum interest rate applicable to non-term VND deposits and those with a term of less than one month will drop from 2 percent to 1.2 percent per year, while the maximum rate applicable to deposits in US dollars from 1 month to less than 6 months will be lowered from 7.5 percent per year to 7 percent per year.
The maximum rate applicable to Vietnam dong deposits with terms from 1 month to 6 months in the People's Credit Fund and microfinance institutions has been reduced from 8 percent per year to 7.5 percent per year.
The maximum rate applicable to dong deposits with terms from 6 months will be determined by credit institutions and branches of foreign banks on the basis of supply and demand mechanisms.
At the same time, the central bank also cut interest rates in VND for a number of prioritized areas, like rural agricultural exports, supporting industries, small and medium enterprises, and high-tech companies, from10 percent per year to 9 percent per year.
Short-term lending rates in VND of People's Credit Fund and microfinance institutions for capital needs will be lowered from 11 percent per year to 10 percent per year.
With the dollar, the central bank cut the maximum interest applied to deposits held by organizational institutions from 0.5 percent to 0.25 percent per year, and from 2 percent per year to 1.25 percent per year for individuals.
According to the SBV’s announcement, the rate adjustments are aimed at implementing Resolution 01 perNQ-CP, which dates back to January 7, on the major solutions to execute the government’s directives for 2013 socioeconomic development and the 2013 state budget plan.
Accordingly, the central bank is responsible for operating the financial market, ensuring the value of the Vietnam dong, and implementing synchronous measures to improve the balance of international payments and the national foreign exchange reserves.