The State Bank of Vietnam
on Wednesday set up an investigative team led by the bank’s deputy governor,
Tran Minh Tuan to work with Hanoi-based banks to inspect unusually high
interest rates.

Habubank cashiers count money in Hanoi. The State Bank of Vietnam expects
that credit growth will reach the target for the year of 25-27 per cent.

In response to the move, Techcombank and Seabank, which had
raised deposit interest rates to a record high of 17-18 per cent per year,
immediately cut interest to around 14 per cent later the same day.

Late last week, the central bank sent a message that the
strong rise of commercial-bank interest rates was unavoidable, but it would
help reduce capital access and control rising inflation.

However, the bank added that taking into account a
double-digit possibility, deposit interest rates should be at least 13 per cent
in order to balance interest of both depositors and borrowers.

“The exceptionally high interest rates imply that some
banks have faced capital problems,” a senior official from the central
bank who wished to stay anonymous said. “There’s nothing wrong with the
system as a whole.”

The central bank has pumped tens of trillions of dong into
the interbank market to support the system’s liquidity. On Tuesday, the total
trading volume hit VND40 trillion ($2 billion).

Interest rates began rising after the central bank raised
the benchmark interest rate from 8 per cent to 9 per cent in November and, to
some extent, allowed commercial banks to set their own interest rates to
attract more depositors while inflationary pressure grew.

The consumer price index hit 9.58 per cent for the first 11
months of the year.

The governor assured the measures would apply for only three
to six months and would have no long-term consequences.

The State Bank of Vietnam announced that credit
growth would reach the annual target of 25-27 per cent. While tightening credit
for the non-manufacture sector, the system has continued to finance the
agricultural sector, export, and small-and medium-sized enterprises at reliable
rates of 12-14 per cent.

The government has instructed the central bank to review the
impacts of the monetary policy and manage it flexibly to actively stabilise the
economy in order to meet business demands, to secure payment capacity and
stabilise foreign exchange.

The central bank was also instructed to work with the
municipal people’s committees to expose and punish gold and foreign currency
accumulation and speculation that harmed the market.

Source: VNS