Illustrative photo (Source: VNA)Hanoi (VNA) – The National Financial Supervision Commision hasassessed in its financial report for July that declines in the interest rate forthe rest of 2017 will be supported by both domestic and international factors.
The pressure on the exchange rate is not high, with the value of the USdollar falling more than 7 percent compared to early this year, and the possibilityof the US Federation Reserve raising its interest rate this year below 50percent.
At the same time, inflation is likely to stay below the NationalAssembly’s target of 4 percent, while only 25 percent of Government bondissuance plan needs to be fulfilled in the final five months of 2017.
Interest rates for Government bonds of all terms also dropped 0.2-0.3percentage points compared to the end of June, lower than the same period lastyear by about 1 percentage point, which also supports the cutting of banks’interest rate, according to the committee.
The committee also said that State policies have aided the interestrate’s reduction. The deposit interest rate has remained stable and the lendinginterest rate has been falling since the State Bank of Vietnam (SBV) reducedits prime interest rate andthe ceiling rate of short-term loans for some sectors.
Meanwhile, bad debt settlement has received favourablelegal mechanisms, via the National Assembly Resolution 42/2017/QH14 on pilotsettlement of bad debts and the Prime Minister’s approval of a project torestructure credit institutions in tandem with bad debt tackling for 2016-2020.
The committee also reported that in July, the liquidityof the banking system was high as interbank interest rates dropped to thelowest points since early this year by 0.6-1 percentage points compared to Juneand 3-4 percent over early 2017.
The reason for this was the SBV’s purchase of a lot offoreign currency to raise foreign currency reserves, thus increasing VNDprovision to the market.
In the July cabinet meeting, the Government also askedministries and sectors to work harder to fulfil this year’s economic growthgoal of 6.7 percent.
The SBV has been asked to continue reducing lendinginterest rates to suit macro economic developments, inflation and currencymarket to boost production and business, while working with ministries andsectors to remove difficulties and provide loans for hi-tech and greenagriculture.-VNA
VNA
