Vietnam can only cut deposit interest rate by at most 1% to 8% from now to end-2012 as inflation is forecasted at 7-8% per year, said Le Xuan Nghia, former vice chairman of the National Financial Supervisory Commission –NFSC).

He analyzed that amid the conditions of deposit interest rates in the USD is now at 2% and inflation can rise 4% in the second half, confidence in USD at 2% and deposit interest rates in the dong at 9%, Vietnam can only cut dong-denominated deposit interest rates by at most 1%, if we cut more, people will swift to USD causing forex instability.

Referring to lending interest rates, he expects the rates to fall to around 12% by the year-end on normal NIM of 3%.

He also drew 3 scenarios for economic growth in the second half (1) if credit growth rises 6% in H2, economy will expand 4.9-5.1% and inflation of under 0.5% a month; (2) if credit growth increases 9%, GDP will rise 5.2% and inflation under 1% per month and (3) credit growth increases 12%, GDP will rise 5.4%-5.6%  and high inflation will return.

 

Source StoxPlus