Savings rates at Vietcombank and Agribank have been reduced to 5.5 percent, which is the same as the record-low they hit during COVID-19, according to VN Express.
Why it matters: The banking sector has been on a wild ride over the last year as the pulleys and levers designed to stabilise the economy have strained under the weight of rapid changes to the global econmy. This time last year, Vietnam’s credit room limit was running out and banks were raising interest rates, particularly on term deposits, so that they would have cash on hand to lend. Now the reverse seems to be true. This latest cut in savings interest rates coincides with credit growth reaching just 5.33 percent at the end of August (a long way from the annual target of 14 percent).
This matters because a lack of demand for Vietnamese dong is pushing the value of the Vietnamese dong down. The value of the Vietnamese dong is already almost the lowest it has been in the last five years and it may be headed lower. If this happens, with most cross-border trade transacted in US dollars, imports are likely to become more expensive and exports are likely to become cheaper.