Vietnam News Network

The State Bank of Viet Nam has ordered credit institutions to report by the end of next week on outstanding loans and investments involving US dollars.

This is the second time the central bank has asked for such reports. In May, commercial banks and finance companies were ordered to provide detailed reports about their foreign exchange operations to help the central bank improve Viet Nam’s balance of payments.

Commercial banks this time have also been told to draw up plans concerning how they would use their foreign currency reserves to service debts in the final quarter of this year and first quarter of next year.

Outstanding loans in foreign currency at banks in HCM City totalled an estimated VND186.1 trillion (US$9.5 billion) at the end of September, 36-per-cent higher than at the same time last year.

Loans in US dollars rose by 6.1 per cent during September, a significant increase over August’s month-on-month rise of 1 per cent.

Overall loans in foreign currencies exceeded deposit totals, with financial experts noting that banks had lent from a surplus of US dollars they had received from parent companies or or foreign credit institutions.

Although the supply of US dollars from remittances, services, and tourism often increases sharply in the fourth quarter each year, psychological expectations of a more expensive dollar often ignite the crowd to hoard the greenback, pushing the demand for dollars even higher.

But State Bank of Viet Nam Governor Nguyen Van Giau disagreed with this assessment, urging analysts not to obsess over the issue.

“The Government has managed very well so far, and the ministries are co-operating quite effectively,” Giau said.