Interest rates in Vietnam soared over the past week after the central bank signaled tighter monetary policy to curb inflation and stabilize the foreign exchange market.
Banks were offering deposit rates of 12-13 percent on Monday, up from 11 percent early this month, lenders' websites showed. The rates jumped to 14-15 percent last Wednesday while loans were available at 17-18 percent, before falling to 16-17 percent this week. Interbank rates soared to 23-24 percent at times last week, tripling from a month earlier, Sai Gon Giai Phong newpaper said.
Businesses said profits would be eroded by higher lending rates as well as the weakening dong, which has pushed up prices of imported materials.
Saigon Co.op, a major retail chain in southern provinces, will have to revise its earnings estimate this year, Bui Hanh Thu, deputy director of the chain, was quoted as saying in the Sai Gon Giai Phong newspaper.
The market moves came along with the government's shift from boosting economic expansion to curbing inflationary pressures and calming the foreign exchange market.
Le Duc Thuy, chairman of the National Financial Supervisory Commission, said earlier this month the central bank would "leave interest rates for the market to decide", instead of urging lenders to bring them down.
Falling interest rates had contributed to pressure on the dong as depositors withdrew their savings in a rush for US dollars.
The central bank raised the benchmark base rate to 9 percent from 8 percent on Nov 5, the first move since last December.
But the central bank did not expect the deposit and lending rates to rise so swiftly, economists said.
The central bank has also vowed to speed dong cash injections via the open market operations, saying it had injected VND50 trillion ($2.5 billion) into the system during the last three days of last week, the Vietnam Investment Review reported.