US dollar credit on increase
The exchange rate between Vietnamese dong and greenback has continued being sustainable in the last days of April. The forex rate of free market stood at a fairly low level and was closer to the listed rate of banks. Particularly, on April 22, the free market’s US dollar was sold at 19,000 dong equivalent with the banks’ listed price.
The sustainability of forex rate in recent time has attracted enterprises to borrow US dollar loans because the pressure of negotiated loan rate in dong becomes heavier. According to an official statistic till March end, the US dollar outstanding loans of banks surged 11.2 percent against the year early to 151.808 trillion dong while the US dollar deposits rose by 5.5 percent only to 176.392 trillion dong.
Nguyen Hoang Minh, director of SBV-HCM City Branch assessed that the outstanding loans of US dollar could keep rising in the forthcoming time because the gap between US dollar and dong loan rates is about 10-11 percent pa (the dong lending rate at 14-17 percent while US dollar loan rates at 4-6 percent pa). This shows that borrowing US dollar is beneficial as for the companies having the US dollar turnover.
On the other hand, in the current context when the forex rate is tending to surge slightly, the worries on forex rate also have been eased, so more enterprises are seeking US dollar credits.
As stated by Do Duy Thai, CEO of Viet Steel Joint Stock Co (Pomina), in Jan-Apr, his firm has used about 60 percent of bank loans and the majority of which is in US dollar. To ensure the safety of operation and minimise risks, Pomina is highly cautious on the measures of dealing with forex rate movements in order to bring in the highest profit to the company, he added.
Like a leather shoes producer in Binh Duong province, the material source used for production is mainly imported and its products are for export to Europe, so the company now uses US dollar loans instead of the dong as previously thanks to the export turnover in US dollar.
General Director of Orient Commercial JS Bank (OCB), Tran Van Vinh said in a statement that enterprises selected to borrow US dollar at this time to avoid the high pressure of negotiated lending rate of the dong.
Negotiated lending rate band of the dong, which is applied at state commercial banks, is ranging between 13-14 percent pa while that of joint stock banks is common at 14-16 percent pa, even 16-17 percent pa at small to medium sized banks. Currently, banks are trying to pull the negotiation based lending rates down deeper despite they still have to pay a high interest rate for deposits. Meanwhile, US dollar loan rate is equivalent with only one third of dong loan rate.
Central Bank SBV lately released interventions into the monetary market such as ordering big corporations to sell US dollar to banks and also supervised closely the foreign exchange under listed forex rates. Thanks to this, the US dollar supply has been supported respectively and US dollar has been maintained at steady price during the first four months of 2010.
As forecasted by a senior official of ACB, the forex rate will continue standing at such a sustainable level in next two quarters, which will be the good chance for the companies in need of borrowing US dollar loans from banks.
Some banks launched the more highly preventive US dollar lending products helping enterprises convert into the dong easily when the forex rate movements are unfavourable, and helping importers minimise risks as borrowing US dollar for material imports.
Category: Finance
