Vietnam Money-Rates decline on ample money supply
HANOI - Interest rates in Vietnam's interbank money market eased further on Monday, underpinned by healthy liquidity as deposits picked up after the Lunar New Year festival and weaker borrowing demand, bankers said.
State-run banks offered overnight dong loans at 5.8-6.1 percent, down from 6.3-6.5 percent last week .
"All banks are sitting on a lot of cash as this is the peak time of the year for deposits but the flip side is very slow lending business," said a manager at a semi-private bank in Hanoi.
He said most of his bank's branches reported a surge in new deposits of up to 20 percent in January compared to December 2005 as more clients chose to put money in saving accounts after the Tet festival that ended early this month.
Demand for the Vietnamese dong has eased after the New Year break, a turnaround from the period before the week-long Tet holiday when cash was sought for corporate bonuses and consumer spending.
"Traditionally it is bad luck to borrow in January so we've hardly had any loan customers in the past month but that would change from March and usually really pick up in April," said another banker at a state-run bank in Hanoi.
"Right now it is a good time to raise new funds," he added.
This week the semi-private Techcombank is scheduled to launch its first issue of certificate of deposits to raise 300 billion dong ($19 million). The 11-month paper carries a monthly coupon of 0.77 percent.
In addition, the Finance Ministry has said its 2006 dong bond sales would start on Wednesday, with the aim of raising 15.5 trillion dong ($975 million) from the domestic markets for irrigation projects and roads. ($1=15,887 dong)
Reuters - February 13, 2006.
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