The State Bank of Vietnam (SBV) purchased US$4 billion worth of foreign currencies for the national foreign exchange reserve in the first two months of this year thanks to stable foreign exchange rates, the chief of SBV announced at a recent meeting in Hanoi on the weekend.
SBV made the purchase in the January-February period given the stability of the local financial market, SBV Governor Nguyen Van Binh said Saturday.
The purchase that has enriched the national forex reserve, which was reported to have over $30 billion at its disposal by the end of last year, will help stabilize the forex rate in the market, he added.
The popular exchange rate between the Vietnamese dong and US dollar quoted at local commercial banks on the weekend were at VND21,060-21,080 and VND21,120-21,130 to the dollar for bid and ask, respectively.
The interbank rate quoted at SBV transaction offices has remained unchanged at VND21,036 to the dollar from late June last year.
The total money supply of the local economy was estimated to rise by 1.94 percent compared to December 2013 and 3.31 percent over the same period last year, according to the official statistics calculated from January to February 20.
Total deposits at credit institutions increased by 0.83 percent compared to December 2013, of which deposits in Vietnamese dong and foreign currencies rose by 0.54 percent and 2.6 percent, respectively.
The current situation will pave the way for more rate cuts in the near future, at about 1-2 percent expected for the whole year, said SBV governor Binh.
According to a recent report of the Ministry of Planning and Investment, many state-owned commercial banks and some commercial joint stock banks have good liquidity with deposit interest rates lower than the ceiling rate prescribed by the central bank.
However, the total outstanding credit of the economy was estimated to decrease by 1.66 percent compared to the end of 2013 and 0.86 percent compared to the same period last year.
While outstanding loans in dong fell by 1.94 percent, those in foreign currencies were estimated to inch up by 0.11 percent.
As lending rates have held steady, some businesses with a healthy financial situation, transparent business plans, and profitable projects have already accessed loans with lending rates of only 6.5-7 percent a year, Binh said.
At a Friday meeting held by SBV in Hanoi, Nguyen Thi Hong, head of SBV’s Monetary Policy Department, asserted that the central bank will continue to actively adjust its monetary approach this year in flexible coordination with a fiscal policy to curb inflation and ensure appropriate growth for the economy.
"As the lending rates in both VND and USD are stable and at reasonable levels, many banks have offered loans in VND at below 6 percent a year, which is lower than the deposit interest rates," local newswire Vneconomy quoted Hong as saying at the meeting.
According to Hong, the Vietnam Asset Management Company (VAMC) has bought VND39 trillion ($1.8 billion) worth of bad debt, of which VND200 billion ($9.4 million) has been successfully recovered, said VAMC's vice president Nguyen Quoc Hung in the Friday meeting held by the central bank in the Vietnamese capital.
VAMC, the asset management hand of SBV, has also planned to purchase VND10 trillion ($473 million) more of bad debt from local banks in the first three months of 2014, he said.
VAMC has mapped out proposals to restructure the bad debt it purchased to relieve the burdens on local banks so that they can lend more, thus offering more room for new loans to local businesses.“The purchase by VAMC has helped Vietnamese banks remove bad debt from their books and polish their balance sheets. Under standards set by the central bank, the bad debt ratio of the system increased from 4.08 percent in 2012 to 4.73 percent in October 2013, though the ratio was reduced to 3.63 percent in December the same year,” the Vietnam News Agency reported.