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Monday January 29, 5:50 PMVietnam Money-Overnight rates fall on ample supplyHANOI, Jan 29 (Reuters) - Vietnam's dong lending rates continued to fall in the past week on the interbank market amid ample short-term funds, bankers said on Monday.Four state-run banks, the country's key lenders, quoted overnight loans at between 6 percent and 6.3 percent, from a range of 6.5-7.5 percent last Monday and 7.8-8.0 percent two weeks ago . "Most banks are sitting on a lot of cash right now so short-term rates would stay low for now," a banker at a foreign bank in Ho Chi Minh City said. Bankers said attractive interest rates, as high as more than 9 percent per year, triggered a surge of around 26 percent in dong deposits at banks last year while lending only grew by 17 percent during the same period, resulting in a surplus. "The surplus should only be temporary as borrowing demand especially for long-term funds for capital investment and infrastructure development by large corporations is enormous," another banker in Hanoi said. Major projects include a scheme by the Transport Ministry to invest $20 billion to upgrade national roads and bridges in the next four years. Dominant utility Electricity of Vietnam has also said it would seek bank loans of $860 million this year alone to build new grid and power plants. In addition bankers said the fast-expanding stock markets in Ho Chi Minh City and Hanoi also triggered demand for the dong from foreign and Vietnamese investors to invest in shares. The VN Index on the Ho Chi Minh City Securities Trading Center which lists 107 companies, has risen more than 32 percent already in 2007. "The explosion of Vietnam's stock exchange has drawn interest from foreign investment funds to plow money into Vietnam, resulting in enormous demand to sell foreign currency for the dong," the central bank said in its January market report. On the dollar front the bank said dollar supply was robust in January thanks to a record influx of foreign direct investment last year, forecast at $10 billion, and a record high level of around $4 billion in remittances from overseas Vietnamese. On Monday, the dollar was quoted at 16,045/16,047 on the interbank market compared with the official rate of 16,126 dong. |
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