Want to be in the loop?
subscribe to
our notification
Business News
BANKS TAKE OUT INT€™L LOANS TO MEET LONG-TERM NEEDS
Vietinbank has recently also signed a syndicated loan worth $200 million with 18 international banks in Taipei, led by BNP Paribas and Taipei Fubon Commercial Bank.
Vietinbank said the foreign currency loan would provide the bank with funds for the production and business activities of enterprises.
Some other domestic banks are also negotiating with international institutions for loans.
NgÆ°á»i Lao Äá»™ng (Labourers) newspaper quoted Director of the central bank’s Monetary Policy Department Bùi Quốc DÅ©ng as saying that previously, US dollar holders often deposited short-term tenors and commercial banks capitalised on the capital source to provide long-term loans.
However, after the central bank cut the interest rate of dollar deposits to zero per cent, dollar holders have turned to demand deposits. Commercial banks, therefore, have to borrow long-term foreign currency loans from international institutions to offset the funds lent to domestic businesses, DÅ©ng said.
Besides this, industry insiders said, commercial banks that used too much short-term capital to provide medium- and long-term loans also had to borrow international loans and then transfer the dollar loans into đồng to balance their long-term funds.
With the transfer, banks also expected to make a profit as they forecast the forex rate would not rise beyond 5 per cent while they would lend the capital in đồng with a long-term interest rate of more than 10 per cent per year. Currently, the interest rate on dollar loans from foreign institutions is roughly 2 per cent per year, equal to the 6 per cent interest in đồng.
However, experts said it would be risky for banks as no one could accurately forecast the movement of the dollar in the global market, according to the NgÆ°á»i Lao Äá»™ng newspaper.
Trần Ngá»c ThÆ¡ from the HCM City Economics University warned that it would be very hard for banks to forecast the movement of the dollar against the đồng under the current foreign exchange policy as the central bank no longer announces a cap for the forex rate yearly but allows the forex rate to change daily.
Thơ suggested that the central bank should not allow local commercial banks to lend out their international loans after transferring them into đồng.
Only the government can legitimately borrow international loans through the issue of bonds, Thơ said.
Source: VNS
Related News
SPECIAL INVESTMENT PROCEDURE: A GAME CHANGER FOR HIGH-TECH PROJECTS IN VIET NAM
Viet Nam is poised for a regulatory shift with the upcoming implementation of a special investment procedure starting earlier next year. Starting from January 15, 2025, investors will be able to enroll for investment under special procedures as outlined in the Draft Decree detailing the Investment Law.
PM ORDERS SWIFT RESOLUTION OF CHALLENGES FOR RENEWABLE ENERGY PROJECTS
Prime Minister Phạm Minh Chính has laid stress on the need to complete the resolution of obstacles for renewable projects by February 2025 to prevent wastefulness, contributing to ensuring electricity for development.
CLEAR LEGAL FRAMEWORK NEEDED TO UNLOCK DIGITAL ASSET POTENTIAL
The past decade has seen remarkable advancements in technology worldwide, particularly in digital assets such as blockchain, cryptocurrencies, asset tokenization and decentralized finance (DeFi). Once unfamiliar, digital assets have now become integral to the global financial system. Leading nations in this field not only to drive innovation but also establish a strategic edge in the global economy.
VIETNAM TO RANK AMONG TOP 15 LARGEST ECONOMIES IN ASIA BY 2025
Based on data from the International Monetary Fund (IMF), Seasia Stats predicts that Vietnam’s economy will reach $506 billion in 2025, earning it a place in the top 15 largest economies in Asia. “Vietnam is rapidly developing thanks to its manufacturing boom and strong foreign investment inflows,” Seasia Stats noted.
HANOI'S ECONOMY CONTINUES TO SUSTAIN GROWTH
Speaking at the opening session of the 20th meeting of Hanoi People’s Council on December 4, Deputy Chairman of Hanoi People’s Committee Ha Minh Hai reported that the capital’s economy has maintained high growth, with regional GDP rising by 6.12 per cent in the first nine months of the year, and expected to exceed 6.5 per cent for the full year.
VIETNAM'S GDP GROWTH WILL LEAD THE REGION IN 2025
A report published by Oxford Economics on December 16 noted that Vietnam's economy has been the region's outperformer in 2024, with full-year growth likely at 6.7 per cent on-year. The country is expected to continue to outperform its peers next year, growing by 6.5 per cent.