[Vnbiz] possible rate cut in August? are they joking?

[Charles Vo]

Quach,

I agree, Quach.  A 16-18% benchmark rate would be preferable as it would allow banks latitude to set interest rates as the market desires.  It wouldn't have to be so darn high if Vietnamese citizens had confidence in the VND.  I know of folks who have stacks of US dollars on a shelf.  They have no belief in the dong or the banking system.  I have bank deposits in dong, but I haven't been jaded against the dong like citizens of Vietnam.  I've just been here a couple of years.

The fact that lending rates are capped at 21% now is just insane.  Who would loan out money to a business and risk default when they can buy a 1 to 5 year Vietnam government bonds at 20-21%?  Look at the pawn shops now.  They are charging 4% per month at some shops.

At a time of incredible uncertainty about the dong, one should look at keeping elevated rates for a longer period of time.  The dong's drop from late March to around 19,600 in early June was jaw dropping for a currency.  This isn't a stock.  Currency should not be dropping at that pace.  Taiwanese investors, the largest investors in Vietnam, have had to rethink FDI plans due to this currency instability.  

PM Nguyen Tan Dung and the other government officials talked tough about currency stability.  They need to back it up.


--- On Thu, 7/3/08, Quach Manh Hao <quachhao at gmail.com> wrote:

> From: Quach Manh Hao <quachhao at gmail.com>
> Subject: Re: [Vnbiz] possible rate cut in August? are they joking?
> To: vnbiz at vietlinks.net
> Cc: "Vnbiz" <Vnbiz at mail.saigon.com>
> Date: Thursday, July 3, 2008, 4:24 PM
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