Vietnam banks aksed to restrict forex loans

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The State Bank of Vietnam has asked commercial banks to restrict lending to importers of luxury products in an attempt to narrow the country's trade gap.

Banks have to report on the amount of foreign money they sell and lend to importers every week, the central bank said.

Lenders should only provide foreign currency loans to exporters who are capable of repaying the loans later, and they must keep their foreign currency loans below their total deposit levels to prevent liquidity risks, it said.

Many experts have warned against the fast expansion of dollar loans in recent months. They said the trend could put pressure on the dollar supply later this year when businesses begin repaying their loans.

Loans rose 1.86 percent from April in May alone, during which period dollar loans rose 3.16 percent, according to the State Bank of Vietnam. Dollar loans had already expanded 14.07 percent in the first quarter.

Vietnam's trade deficit in the first five months of 2010 was $5.38 billion, according to official statistics.

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