Vietnamese dong rate up, dollar edges higher

State-run Agribank, Vietnam’s largest lender, started issuing short-term certificates of deposits last Thursday and, to lure customers and raise VND6 trillion (US$337 million), said it plans to hold a lucky draw for prizes of gold in October.

A statement from the Hanoi-based bank said the dong funds will help meet lending demand and, in particular, to meet farmers’ funding needs.

Other banks raised rates by between 0.2-0.4 percentage points for all the three-month, six-month and one-year terms, the State Bank of Vietnam said in its weekly money market review.

State-run banks, which command a major share of domestic lending, raised 12-month deposit rates to 8.5-8.8 percent in the week ending Aug. 20, from 8.2-8.5 percent a week ago.

But central bank data showed loans under the government’s rate subsidy package in the week ending Aug. 20 rose 0.25 percent from the previous week to VND396.05 trillion, slowing from a 1.52 percent growth in the previous week ending Aug. 13.

Loans under the package extended by state-run banks were slowing, the central bank said without elaboration. The stimulus package offers a subsidy to cover 4 percentage points of certain loans from February.

On the dollar front, the central bank has signed an agreement with the Industry and Trade Ministry to tighten foreign exchange control as dollar rates were rising on the unofficial markets and a government agency forecast annual exports to fall this year.

The two agencies will ’coordinate in managing exports and imports, curbing the trade deficit, ensuring the forex demand for the import of goods essential to the economy’, the pact signed last Thursday and seen by Reuters said.

It also said the trade ministry will move to ensure the dong be used in price quotations and payments in domestic trade, instead of the dollar, as a measure to limit the dollar demand.

On the unofficial markets, the dollar rose to VND18,440/18,460 on Monday from VND18,370/18,400 last Friday and VND18,340/18,370 a week ago.

Vietnam’s exports could as much as 6.4 percent this year to $58.6 billion, the Planning and Investment Ministry-run centre for economic forecasts said earlier this month, while the Industry and Trade Ministry previously forecast a 3 percent rise.