The State Bank of Vietnam (SBV) has set a maximum interest rate for demand and time deposits shorter than 1 month of 6.00% p.a. and maintained a maximum interest rate for deposits greater than 1 month of 14.00% p.a. The SBV said: “in cooperation with the public securities authorities has detected a number of violations of the maximum interest rate and imposed strict sanctions on these cases of violation. In addition, several credit institutions have offered the VND mobilizing interest cap of 14% p.a for very short terms (24 hours, 2 days, 1 week and 2 weeks), thus causing negative impact on the implementation of Directive No. 02/ CT-NHNN and potential maturity and liquidity risks for credit institutions and the banking sector as a whole.”
The Vietnamese central bank last raised the required reserve ratios on foreign currency by 100 basis points in June this year and lifted dollar reserve ratios 100 basis points in August. The bank also increased its reverse repurchase interest rate by 100 basis points to 15.00% in May this year, and subsequently reduced the OMO rate by 100 basis points to 14.00%. Vietnam reported annual inflation of 22.42% in September, compared to 23.02% in August, 22.16% in July, 20.82% in June, 19.78% in May, and 17.51% in April this year, according to the General Statistics Office. The Vietnamese Dong is currently trading around 20,830 against the US dollar.