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US dollar shortage vexes forex market   2010-08-09 - Viet Nam News

The domestic monetary market is facing a foreign-currency deposit and lending imbalance, according to independent market watchdogs.

Experts said lending in foreign currencies continued to increase in July while deposits of foreign currencies saw a slight decrease.

This is the seventh month in which the market has observed credit growth in foreign currencies surpassing those of the Vietnamese dong.

According to the Ministry of Planning and Investment data, credit activities in foreign currencies in July increased by 1.6 per cent against June and raised the total credit growth rate over the last seven months to 34.4 per cent.

Deposits of foreign currency fell by 0.25 per cent in July compared with the previous month’s figure, and by 2.4 per cent against December 2009.

As a result, the gap has widened between supply and demand of the US dollar at commercial banks, experts have said.

The rate for loans in US dollar has slightly increased in recent months, and the exchange rate of the US dollar against the Vietnamese dong has continued to rise, partly due to an imbalance between lending and deposits in foreign currencies at local commercial banks.

Some major commercial banks have continued to raise the buying rate of the US dollar as well as the interest rate of US dollar deposits to close their loan/deposits imbalances in foreign currencies.

The Joint-Stock Bank for Foreign Trade of Viet Nam (Vietcombank), for instance, has continually raised the buying rate of the US dollar from VND19,065 per US dollar on July 5 to VND19,080 on July 9 and to VND19,090 on July 27.

On August 5, it stood at VND19,100 per US dollar. Within only one month Vietcombank’s buying rate of the US dollar was raised an additional VND33 per US dollar.

The banks have also applied another method to attract more dollar to meet customer demand through increasing their deposit rates.

The interest rate of US dollar deposits has stood between 3.5 per cent and 5 per cent for a long time. In recent days, it climbed to at least 5-5.45 per cent per year at many banks, including Lien VietBank, PG Bank and ABBank.

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