Vietnam not to lift interest cap for bank deposits

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Asia Commercial Bank in Ho Chi Minh City. Photo by Diep Duc Minh

Bank lending, despite falling short of the growth target, focused on priority borrowers and deposit rates will remain capped next year to keep interest rates in check, the central bank has said.

Nguyen Thi Hong, head of the State Bank of Vietnam's Monetary Policy Department, said at a press briefing Monday that credit growth this year would be around 9 percent against a target of 12 percent.

But bank lending was focused on areas like agriculture and rural development, sectors using high technology, export, and supporting industries, she said.

Banks last June lowered the deposit rate cap from 7.5 to 7 percent.

Hong said the cap would remain in place next year, but said the central bank would consider lifting it when "the monetary market is stable and banks' liquidity improves."

Monetary policies would aim to contain inflation at around 7 percent and help hit the economic growth target of around 5.8 percent, she said.

Vietnam's economic growth of 5.25 percent last year was the weakest since 1999. The government said growth this year would be around 5.4 percent.

Hong said while the SBV could not guarantee that the value of the dong would remain unchanged, it would be stable.

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