Vietnam may cut dollar interest rates to curb hoarding

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The State Bank of Vietnam plans to reduce dollar holdings among the public next year and an interest rate cut is being considered to achieve the goal, Governor Nguyen Van Binh said Thursday.

The central bank, which is drafting a new ordinance on foreign currencies in Vietnam, wants to restrict the use and saving of dollars, he said.

However, since this is a "sensitive" issue that affects personal rights, the new policy will not explicitly impose any restraint. Instead other tools will be applied, Binh said, naming the current interest rate cap on dollar deposits as an example.

"The State Bank will consider interest rates and may adjust them to a reasonable level," he said at a meeting with the Standing Committee of the National Assembly, Vietnam's legislative body.

The central bank has applied a 2 percent ceiling on dollar deposits by individuals since June of last year. The rate cap for institutional deposits is 0.5 percent.

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