Foreign currency loans stimulate credit growth
Foreign currency loans stimulate credit growth
Export companies preferred loans in foreign currencies than in the Vietnamese dong due to a stable foreign exchange policy and lower interest expenses.
Although the interest rate of loans in Vietnamese dong was cut considerably this year, it remained about 30 per cent higher than the interest rate of loans in foreign currencies.
Experts said that loans in foreign currency became a major stimulator of credit growth.
Statistics showed that as of September 22, the outstanding loans in foreign currencies increased by more than 20.7 per cent, five times the amount of outstanding loans in Vietnamese dong.
Several export companies said that they preferred loans in foreign currencies due to the low interest rate, about 3 to 4 per cent annually, with the State Bank of Viet Nam's pledge to control the exchange rate fluctuation within the +/-2 per cent amplitude from late 2011.
According to Tran Quoc Manh, general director of Sadaco, the interest expenses for loans in foreign currencies were much lower than loans in Vietnamese dong. This resulted in rising demand for loans in foreign currencies, especially at the end of the year to make payments, he said.
Truong Thi Thuy Lien, director of a footwear and leather export company in the southern Binh Duong Province, said that with the Government's stable foreign exchange policy, companies were assured of safety from the risks of exchange-rate fluctuations.
The central bank on Wednesday pledged to persist with its stable foreign exchange in 2015. Accordingly, the depreciation of the Vietnamese dong against the US dollar will be maintained at less than 2 per cent.
Previously, the central bank's Deputy Governor Nguyen Thi Hong had said that the bank will continue to allow credit institutions to give loans in foreign currencies to export companies and petrol wholesalers till the end of 2015, after reviewing the foreign currency market and next year's economic growth target.
An official document to replace Circular No 29/2013/TT-NHNN on loans in foreign currencies was expected to come out this week.
Still, several experts warned that strong foreign currency credit growth could put pressure on liquidity.
