Vietnam banks raise dollar rates to attract remittance

Vietnam Banks’ depositing interest rate are moving up to attract strong remittance inflows that come in ahead of Tet, the Lunar New Year festival. This was pointed out by general secretary Duong Thu Huong of the Vietnam Bank Association said.

Some banks rush to raise dollar saving rates in an effort to mobilize overseas remittance, which is often getting very strong at the end of every year.

However, Duong said that this move will prompt others in the bank system to follow in an effort to keep their clients.

He noted that lenders are trying to mobilize more dollars in order to meet the increasing demand of companies which import a large volume of goods in preparation for the country’s biggest holiday.

But with the deposit rate of 5-6 percent per annum, lending rate of 7-8 percent and the forex fluctuation, borrowing the dollar seems not a good move.

VNBA recommended lenders in a meeting to think twice before raising the rate, avoiding devaluing the dong. We are now keeping close eyes on the dollar depositing rate to make regular reports to the central bank.

"I think the state bank should step in to curb the increase, which is encouraging people to halt depositing the dong and buy dollars to send into banks," said Duong.