Why is the USD savings interest rate 0%?

(NLDO) – If the USD savings interest rate increases, it will create a shift from VND to USD, and the market will be at risk again.

From November 20, Decision No. 2410/QD-NHNN of the State Bank stipulating the maximum interest rate for USD deposits of organizations and individuals is 0%/year, will take effect.

The State Bank said that the issuance of this new decision aims to ensure consistency in legal basis with circulars regulating deposit interest rates, in which the legal basis for issuance is revised and deposit interest rates are not changed.

Thus, the foreign currency mobilization interest rate remains 0%/year, unchanged for many years.

USD deposit interest rates continue to be maintained at 0%

Previously, at the question-and-answer session at the National Assembly, delegate Pham Van Hoa ( Dong Thap Province Delegation) questioned the Governor of the State Bank: Why do banks have to borrow foreign currency from abroad at high interest rates while only paying 0% interest on USD deposits to people?

Governor Nguyen Thi Hong said that in the past, Vietnam's exchange rate fluctuated strongly because those who held USD did not sell, while those who did not have a need increased their buying, causing a strong increase in demand for foreign currency, causing the exchange rate to increase, causing macroeconomic instability.

Since 2016, the State Bank has applied synchronous solutions, consistently operating according to the inflation control target to stabilize the value of VND. Combining interest rate and exchange rate policies to create attractiveness for VND, including bringing USD deposit interest rates to 0%. Operating exchange rates on the basis of the central exchange rate, daily fluctuations up and down with an amplitude of 5%, thereby reducing dollarization, limiting foreign currency hoarding, increasing foreign exchange reserves...

Currently, although the dollarization of the economy has decreased, it still exists.

"This is an effective policy, bringing macroeconomic stability. If we increase USD deposit interest rates now, foreign currency holders will benefit from exchange rate fluctuations and foreign currency deposit interest rates... which will cause a shift from VND to USD. At that time, the market will be at risk of returning to risk" - the Governor of the State Bank said.

Regarding the USD price, on the morning of November 17, commercial banks traded USD at around 25,190 VND/USD for buying and 25,512 VND/USD for selling, an increase of more than 40 VND per USD compared to the end of last week.

Since the beginning of the year, exchange rates at banks have increased by more than 4%, in the context of the USD price on the international market increasing rapidly since the beginning of October.

Source: https://nld.com.vn/lai-suat-hom-nay-17-11-vi-sao-lai-suat-gui-tiet-kiem-usd-la-0-19624111709045316.htm