The dollar was traded stably against dong over last week but in a thin volume ahead of the country’s National Day. The greenback hit a new high against the local currency at 16,020 dong to the dollar for a couple of times since May 2006 but then dropped down soon in line with the quiet atmosphere of the market. Meanwhile, the exchange rates between the dong and other major currencies such as euro and yen also fluctuated in narrower ranges since the global market seemed not to try taking too much position by month-end period while waiting for some US economic data to be released later.
The dollar, actually, received firmer on the international market by end of last week after a report showing August payrolls growth was slightly above expectations, but soon lost steam as there was no strong data enough for investors to change their view that the slowing economic growth in the US will moderate inflation pressures. The Federal Reserve kept its official interest rate at 5.25% last month after 17 consecutive rate increases over a two-year period.
Stable dong interest rates The local market continued to see stable dong interest rates due to strong liquidity supply despite the month-end period. The four state-owned banks kept their overnight rates offer at below 6% while one-and two week funds dropped to 6.2% and 6.5% respectively.
Since early this year, most commercial banks have still been in surplus of short-term dong liquidity but still increased their dong and dollar deposit rates.
According official figures, local commercial banks in HCM City have borrowed 238.9 trillion dong from their customers so far this year, mostly from up to one Year deposits, while they have lent out only 205.7 trillion dong. However, commercial banks are still increasing deposit interest rates since they do not want to lose any deposit customers to other banks.
The interest rates for one-year tenor deposits have been pushed up to reach 99.5% per annum compared to one year earlier levels at 88.5%. On the dollar side, local banks’ deposit rates increase is explained by seventeen consecutive rises from June 2006 till the middle of this year. The dollar deposit rates currently stands around 44.8% per annum for different tenors under one year.
This article was written by HSBC Vietnam and is intended for reference purposes only