Several commercial banks have pushed the annual interest rates on US dollar deposits up to 4.6% due to a shortage of dollars.

Annual interest rates of US dollar deposits continue going up

Due to the pressure caused by the increasing demand of borrowing US dollars from exporters and importers in the final months of 2010, the average annual interest rates of US dollar deposits in Vietnam are now ten times higher than the average of most countries in the world.

Interest rates on 3 month term deposits in international markets are currently around 0.25-0.35% per year.

In Hanoi, the annual interest rates of US dollar deposits in banks currently averages 4.5-4.6%.

The Military Commercial Joint Stock Bank (MB) has increased its interest rates on 12 and 24 month term deposits in US dollars to 4.4% per year, which is 0.1-1.34% higher than their last set interest rates.

Asia Commercial Joint Stock Bank (ACB) has raised its interest rates of US dollar deposits to 4.7% per year, which is 0.05-0.25% higher than their last set interest rates.

As of September 15, the Vietnam Commercial Joint Stock Export-Import Bank (Eximbank) adjusted its interest rates on 3 month term deposits in US dollars up to 4.75% per year and on 6 month term deposits in US dollars up to 4.95 % per year.

Most notably, An Binh Commercial Joint Stock Bank (ABBank) offers interest rates on 60 month term deposits in US dollars at rates as high as 5.6% per year.

According to the website www.laisuat.vn, interest rates of US dollar deposits at 37 banks listed on the website are from 3.5% to 5% per year which is applied to individuals receiving their interest payment at the end of each term. The difference of the interest rates between short, medium and long terms is 1.5% on average.

Saigon Commercial Bank (SCB), Southeast Asia Commercial Joint Stock Bank (SeABank), Ho Chi Minh City Housing Development Bank (HDBank), Petrolimex Group Commercial Joint Stock Bank (PGBank) and ABBank are among banks offering the highest interest rates of US dollar deposits.

Representatives from several banks said that they had increased interest rates of US dollar deposits during this time in a bid to attract more depositors, compete for deposit market shares and more importantly, to meet the demand of borrowing US dollars for exporters and importers.

If deposit rates in US dollars are 5% per year, lending rates in US dollars will be 6-7% per year. Some businesses said that they could afford to pay these lending rates when they compare with the lending rates in Vietnam dong. At present, lending rates in Vietnam dong for short terms are about 13-15% per year. Thus, enterprises can accept the lending rates in US dollars at 6-8% per year in addition to changes in the exchange rate between the US dollar and Vietnam dong.

The concern among importers and exporters about changes in the exchange rate remain even if they can afford to pay the existing deposit rates in US dollars.

In late 2008, the exchange rate shot up to 20,000 Vietnam dong to 1 US dollar during some periods. It had a major impact on exporters, importers and small foreign currency investors.

Most recently, many enterprises were surprised at the State Bank’s sudden 2.1% adjustment to the average exchange rate in August, from VND18,544 to VND18,932 per dollar.