Intellasia News Services -- Vietnam Money-Rates up, in part due to rice, coffee schemes

Vietnam Money-Rates up, in part due to rice, coffee schemes
Source: 10-MAR-2010 Intellasia | Reuters
10 Mar, 2010 - 7:00:00 AM
Short-term money market rates in Vietnam pushed higher on Monday as banks sought fresh funds to meet demand from the rice and coffee sectors in particular, bankers said.

Banks have also raised deposit rates through various promotional packages to attract funds.

Interbank rates had fallen in late February when money started flowing back into bank accounts after the Tet holiday, but the one-week lending rate rose to 8.35 percent on Monday from 8.14 percent last Friday and 8.0 percent on February 26, according to Reuters data.

Outstanding loans at the end of February rose 1.4 percent from the end of 2009 and money supply increased 1.39 percent, while deposits fell 0.17 percent, the central bank said.

"Banks need to pay attention to stepping up marketing to help raise funds," State Bank of Vietnam Governor Nguyen Van Giau was quoted as saying in a central bank statement on Monday while meeting with Mekong Delta-based bankers at the weekend.

If the value of cash prizes and other promotions that banks started offering last week is taken into account, deposit rates stand at 12.5-14.0 percent, above the 10.5 percent ceiling major banks agreed to adhere to in late 2009, Monday's Securities Investment magazine said.

Demand for funds has risen in part because of government-backed plans to stockpile 200,000 tonnes of coffee and 1 million tonnes of rice, which could cost as much as 12.92 trillion dong.

Last week the central bank asked banks to prepare funds to help rice companies buy 1 million tonnes of husked grain, equivalent to 2 million tonnes of paddy, to prevent prices falling further when the harvest peaks this month in the Delta.

That would require at least 8.4 trillion dong, given Mekong Delta paddy stands at 4.2 million dong a tonne.

In addition, the government has urged the Agriculture Ministry and central bank to help companies buy coffee when prices fall, according to a statement on Monday on the central bank's website.

Traders and industry officials said coffee stockpiling could start this month.

Banks would need at least 4.52 trillion dong, based on Monday's domestic price of 22.6 million dong per tonne in the Central Highlands coffee belt.

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