Some of the banks plan to reduce the dong deposit rates to in the wake off removal of ceiling deposit rate and ceiling lending rate on short term loans.

A representative from Sacombank said that his firm will bring the deposit rate to below 10.49 percent pa for short term deposits and apply 12 percent pa on long term deposits only. In addition, the bank will gradually cut down promotions or bonus interest rates.

Similarly, Vietcombank's real deposit rate of dong will range between 10 and 12 percent pa against previous over 12 percent pa, meaning that the short term deposit rate will be lower than current band, according to the general director Nguyen Phuoc Thanh. Vietcombank will not offer cash or plus deposit rates to the customers any more.

Therefore, the deposit rates of banks are on a downward trend so people will be encouraged to deposit in long terms for high interest rates.

Previously, the short term loans of enterprises were changed to medium and long term loans with the average loan rate of 16-17 percent pa. In coming time, the maximum negotiated short term loan rate will be 14 percent pa only.

As for big enterprises using many bank services, the highest short term lending rate Vietcombank applies will be 12-13 percent pa. As for medium and long term loans, the maximum rate is 15 percent pa.

Given explanation of Dr Tran Hoang Ngan from National Financial-Monetary Policy Advisory Council said that SBV will boost the capital supply for the economy through open market operations (OMO) with lower interest rates and longer terms.

Thus, instead of raising deposit rates to lure capital from residents, banks can seek capital at the open market with cheaper cost.

* The US dollar selling price on the free market yesterday stood at 19,200-19,220 dong/US dollar while the purchase price was 19,150 dong/US dollar. So the difference between US dollar selling and buying prices on the formal and informal market was narrowed to 70-90 dong/US dollar.

The current US dollar purchase price at banks is common at 19,060-19,080 dong/US dollar, closer to the level of free market.

(Source: Intellasia)