Vietnam may cut dong deposit

Vietnam’s central bank may cut the ceiling rate on dong deposits by another 2 percentage points to 9 percent later this year to help boost lending and spur economic growth, a state-run newspaper said on Friday, as policymakers across Asia eye fresh stimulus to combat the global downturn.

Another rate cut in the pipeline would help ease corporate difficulties in accessing bank loans, after Vietnam’s economic growth slowed to an annual pace of 4 percent in the first quarter of 2014, the slowest since 2009.

The downward adjustment would be the last in 2012, the central bank was quoted by the ruling Communist Party-run Nhan Dan (People) daily as telling bankers at a meeting on Thursday.

The central bank could also impose a ceiling of 12-13 percent on dong loans with terms shorter than 12 months, while commercial banks could negotiate with borrowers on rates for longer terms, the report said.

Central bankers were not immediately available for comments, while the official Tuoi Tre (Youth) newspaper said the next rate cut would be as early as this month.

The central bank has cut the ceiling rate on dong deposits three times so far this year, having lowered the highest rate banks could pay depositors to 11 percent after inflation had eased. The latest move had been in effect since Monday.

Vietnamese banks with surplus funds should step up lending to the agricultural and export sectors and part of the real estate market, Prime Minister Nguyen Tan Dung said early this week.

Loans by the country’s banking system in May dropped 0.2 percent from the end of 2011, the central bank said at the Thursday meeting.

Vietnam’s economic growth is forecast to slow to 5.7 percent this year from 5.8 percent in 2011, the World Bank said, while Hanoi aims to boost growth to around 6 percent in 2012.

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