VND-denominated interest rates are expected to go up this year. (Photo: www.ibtimes.co.uk)
Interest rates in Vietnam are likely to pick up by one percentage point this year from 2015 as banks see increasing capital needs after credit growth accelerated last year, said the National Financial Supervisory Commission (NFSC) in its latest report.
The hike in interest rates will be driven by higher inflation expectations, bank’s increasing demand for financing as credit growth has outstripped mobilization, and the revision of a central bank regulation that reduces the use of short-term capital for long-term lending, the commission noted.
“However, lending rates will remain under control to aid economic growth,” it predicted.
According to NFSC’s observation, interbank interest rates went in in the first quarter of this year in comparison with a year earlier, particularly at longer-than-12-month terms.
The government-run financial watchdog said that the non-deliverable forward (NDF) for the USD/VND
rate was flat in March and the country’s credit default swap (CDS) was on the decline, indicating foreign investors’ strengthened confidence in the Vietnamese dong.