Vietnam Money-Dollar reserves weaker but adequate
HANOI, Nov 19 Reuters - Vitenam bank holdings of U.S. dollars weakened in the past week after a rate cut by the U.S. Federal Reserve, but traders at state-run banks said reserves remained sufficient."There have been a lot of dollar withdrawals and deposits in dong in the past week," a banker at a foreign bank in Hanoi said on Tuesday.
"People, including individuals and corporates, have been parting from the dollar for the much higher-rate local currency."
Dollars are widely and freely used in the Southeast Asian country for a variety of transactions.
The Fed on November 6 slashed overnight rates to 1.25 percent from 1.75.
The dollar has hardly appreciated over the local currency, picking up just 13 dong, or 0.08 percent since November 1. The dong was quoted at 15,343 on Tuesday, compared with 15,328 per dollar at the beginning of the month.
But some of Vietnams largest state-run commercial banks said the Fed cut had little change on their dollar reserves.
"We still have a lot of dollars in stock," said an official at the Bank for Foreign Trade of Vietnam Vietcombank, one of the key lenders on the countrys interbank market.
"We did cut our rates, but its still high compared with other commercial banks, so our rates are more attractive."
The Feds move has almost immediately put pressure on banks in Vietnam to follow suit with deposit cuts.
Vietcombank, one of the four largest banks in Vietnam, has cut its 12-month rate on deposits to 2.2 percent from 2.4 percent since early this month.
Foreign commercial banks in Vietnam have been paying for similar dollar borrowings at less than two percent.
Meanwhile, dong loans are now widely offered at more than eight percent per year in an effort to gather enough funding for large state-run projects.
Strong dong deposits mean banks have plenty of the local currency to lend on the interbank market.
Annualised interbank overnight rates were unchanged from last week at the 5.00-5.50 percent range on Monday. $1=15,343 dong.
