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Dollar inflows to local lenders surge on rate cap move

Local public have rushed to sell dollars for the dong about two weeks after the State Bank of Vietnam (SBV) capped dollar deposit interest rates at 3% and raise required reserve rate for dollar-denominated deposits by 2%.

Dollar inflows transferred on account last week doubled from the week earlier, an unnamed director of a big commercial bank in HCM city revealed. Notably, the lender bought $15million within a week compared to $1-2million/week previously, mainly comes from the public.

The surge of dollar inflows indicated that corporate and individuals are more willing to sell dollars, he said, adding that a higher dollar supply will help to ease dollar exchange rates.

However, an official from the central bank’s HCMC branch was concerned that when local lenders buy more dollars from the public, they may help boost up dong supply into the market.

Therefore, the SBV should apply foreign currency swap to balance the effects, he suggested.

Meanwhile, some experts recommended the central bank to issue high-yield bonds to attract dollars from individuals and enterprises.

From VietNamBusiness

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