If well managed, interest rates will be stable
Interest rates under pressure |
Striving for stabilization of interest rates in 2017 |
Banks expect stable interest rates |
Interest rates may increase only in a short time. Photo: Huong Diu |
At the seminar on "the Roadmap for interest rates in 2017" held on March 28, 2017 banking experts gave the reason for raising interest rates on deposits over the past time, especially some of the banks issued long-term certificates of deposit with very high interest rates, up to 8-8.8%.
Mr. Nguyen Duc Hung Linh, the Head of Research and Investment Advisory Individual Customer of Saigon Securities Incorporated said that the above issues are influenced by three factors: inflation, exchange rates and bank liquidity.
Accordingly, inflation in the first two months of 2017 was high compared to the same period in 2016, due to the increase in petrol prices. In particular, the Federal Reserve (FED) raised the interest rates twice, but since raising the interest rates the US dollar depreciated, the major currencies, including the Yuan, rose compared to the US dollar and VN dong. This action increased the advantages of Vietnam's export goods, but there were potential exchange rate risks due to trade deficit and decrease in foreign exchange supply while increase in demand.
Particularly, bank liquidity in March, 2017 is quite stressful, the interbank interest rates increased, the demand for loans through the Open market operations (OMO) appeared early, and the current outstanding debt is 25.7 trillion vnd.
Along with these three causes above, Dr.Nguyen Duc Do, the Deputy Director of the Institute of Financial Economics, said that the interest rates on deposits also increased due to the impact of Circular 06 of the State Bank of Vietnam (SBV), with the requirement to reduce the proportion of long-term loans by short term capital source from 60% to 50% taking effect from early 2017.
However, Mr.Nguyen Duc Hung Linh said that if it was seen by the total view, the proportion of short-term capital for the long-term loans at the end of 2016 of the entire system was only 34.5%, of which joint stock commercial banks had a higher proportion of only 39% of average. The use of long-term certificates of deposit with high interest rates will be limited to small scale and focused on joint stock banks which do not guarantee this proportion.
“Therefore, the interest rate in the past time might increase in the short time and was expected to stabilize again in the coming time” said by Mr.Linh.
Assessing the situation of interest rates in the coming time, according to Dr. Nguyen Duc Do, the interest rate trend will mainly depend on how the State Bank treats the zero dong commercial banks. In addition, the the State Bank of Vietnam needs to actively handle bad debts as soon as possible.
Of the same opinion, banking expert Dr. Can Van Luc said that in 2017, there has been the pressure of the interest rate increases. However, if the State Bank of Vietnam drastically implements and manages well, the lending interest rates will remain the as current time.
Interest rates show signs of increasing VCN - In recent days, banks are continuously launching products of long term certificates of deposit with ... |
The solution for management, according to Dr. Luc, firstly, the process of restructuring the weak banks and handling the bad debts needs to be quickly and strongly promoted. Secondly, the measures for increase capital mobilization from the population for production and business needs to be implemented. Thirdly, the internal and external upheaval needs to be closely monitored for timely response. Finally, it is psychological measure.
"With or without additional pressure, the interest rates in Vietnam are at a high rate and negatively affect the economy. Therefore, the State bank of Vietnam must keep the interest rate not increase at least on a large scale in any way. But how is still is a long story " said Dr. Nguyen Duc Do.
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