The State Bank of Vietnam (SBV) has flexibly managed the interest ratepolicy to suit the market and currency exchange demand and supportbusinesses, stated SBV Deputy Governor Nguyen Thi Hong.
Currently, interest rates are at an ideal level, the same level as in2005-2006, she noted, adding that both deposit and lending interestrates have dropped compared to those at the end of 2014.
Specifically, deposit interest rates fell 0.2-0.5 percent per year,mostly for over six-month terms, while lending interest rates declinedby 0.2-0.3 percent per year, standing at about 6-9 percent annually forshort-term loans and 9-11 percent for middle- and long-term ones.
Recently, inter-bank interest rates have decreased sharply to about3-3.5 percent per month, which is relatively low and stable, she said.
Through the rest of the year, the SBV will continueflexibly introducing and withdrawing money from the market for banks toboost credit growth and better meet market demand, said Hong.
The bank will also keep interest rate at a stable level while keeping aclose eye on the operation of commercial banks for timely monetaryadjustments, ensuring management targets set earlier this year.
Hong re-affirmed that the SBV will keep fluctuations of the VND/USDexchange rate at a maximum of 2 percent in 2015, as set in its policyfor the year, despite the fact that the rate has already been adjustedby 1 percent twice this year.
This ispart of efforts to guide the market and help import and exportenterprises actively define their production plan in line withdevelopments of the domestic and global currency market.
Hong said that although the devaluation of the VND may benefitexporters, it would negatively affect manufacturers of export productsmade from imported materials, since the cost of raw materials will behigher.
She noted that the textile and garmentsector had to import 82.5 percent of materials in 2013, the wood sector -70 percent, and footwear - 60 percent.
Althoughthe devaluation might benefit farmers in exporting agro-forestry andfishery products, it would also raise the price of fertilizers,pesticide and agricultural equipment and machinery. As such, exchangerate adjustments to improve price competitiveness would only be slightlyeffective in supporting exports, she held.
At thesame time, total imports of Vietnam account for as much as 80percent of the country’s GDP, evidence of the country’s deep dependenceon machinery and equipment imports. Thus, the devaluation of VND wouldpose additional difficulties for import enterprises.
Statistics show that about 90 percent of Vietnam ’s import productsare machines, equipment and materials and only 10 percent are consumerproducts.
After careful analysis and assessment, theSBV will stick to the policy of maintaining the fluctuation of theVND/USD exchange rate in 2015 at 2 percent as set earlier this year,Hong concluded.-VNA
Currently, interest rates are at an ideal level, the same level as in2005-2006, she noted, adding that both deposit and lending interestrates have dropped compared to those at the end of 2014.
Specifically, deposit interest rates fell 0.2-0.5 percent per year,mostly for over six-month terms, while lending interest rates declinedby 0.2-0.3 percent per year, standing at about 6-9 percent annually forshort-term loans and 9-11 percent for middle- and long-term ones.
Recently, inter-bank interest rates have decreased sharply to about3-3.5 percent per month, which is relatively low and stable, she said.
Through the rest of the year, the SBV will continueflexibly introducing and withdrawing money from the market for banks toboost credit growth and better meet market demand, said Hong.
The bank will also keep interest rate at a stable level while keeping aclose eye on the operation of commercial banks for timely monetaryadjustments, ensuring management targets set earlier this year.
Hong re-affirmed that the SBV will keep fluctuations of the VND/USDexchange rate at a maximum of 2 percent in 2015, as set in its policyfor the year, despite the fact that the rate has already been adjustedby 1 percent twice this year.
This ispart of efforts to guide the market and help import and exportenterprises actively define their production plan in line withdevelopments of the domestic and global currency market.
Hong said that although the devaluation of the VND may benefitexporters, it would negatively affect manufacturers of export productsmade from imported materials, since the cost of raw materials will behigher.
She noted that the textile and garmentsector had to import 82.5 percent of materials in 2013, the wood sector -70 percent, and footwear - 60 percent.
Althoughthe devaluation might benefit farmers in exporting agro-forestry andfishery products, it would also raise the price of fertilizers,pesticide and agricultural equipment and machinery. As such, exchangerate adjustments to improve price competitiveness would only be slightlyeffective in supporting exports, she held.
At thesame time, total imports of Vietnam account for as much as 80percent of the country’s GDP, evidence of the country’s deep dependenceon machinery and equipment imports. Thus, the devaluation of VND wouldpose additional difficulties for import enterprises.
Statistics show that about 90 percent of Vietnam ’s import productsare machines, equipment and materials and only 10 percent are consumerproducts.
After careful analysis and assessment, theSBV will stick to the policy of maintaining the fluctuation of theVND/USD exchange rate in 2015 at 2 percent as set earlier this year,Hong concluded.-VNA
