VIETNAM’S CENTRAL BANK HIKES INTEREST RATES AFTER FED MOVE

The State Bank of Vietnam (SBV), the nation’s central bank, has decided to hike key interest rates by one percentage point, with effect from today, September 23.

The decision came out on September 22 after the U.S. Federal Reserve announced that it is raising interest rates by 0.75 percentage point following its September 20-21 meeting.

The refinancing rate – which the central bank applies to short-term loans for commercial banks – rises to 5% per year from 4% while the rediscount rate, applicable to valuable papers, inches up to 3.5% per year from 2.5%. The 4% refinancing rate and the 2.5% rediscount rate had been in force since October 2020.

The rate is 6% per year for overnight loans in interbank electronic payments and loans made by the central bank in clearing transactions with local commercial banks and foreign bank branches.

On the same day, the SBV made another decision to set new interest rate caps on deposits of individual and institutional customers, with effect from today, September 23. The highest rate for demand deposits and those with tenors of less than one month is 0.5% per year and that for deposits with tenors ranging from one month to less than six months is 5% per year.

For people’s credit funds and micro-finance funds, the interest rate cap on savings with tenors ranging from one to less than six months is 5.5% per year.

Source: The Saigon Times