On July 17, 2024, in Hanoi, under the chairmanship of Deputy Governor Pham Thanh Ha, the State Bank of Vietnam (SBV) organized a meeting with several economic experts to discuss about the foreign currency policy and the interest rates applied to the USD deposits. At the meeting, the experts highly complimented the SBV for its anti-dollarization measures, as well as the 0% interest rate policy, which have been making positive effects, contributing to the stability of the exchange rate and the foreign exchange market, reducing the dollarization, increasing the foreign exchange reserves,...
Deputy Governor Pham Thanh Ha chairs the meeting
Speaking at the meeting, Deputy Governor Pham Thanh Ha informed that, implementing the Party’s and the Government’s guidance on the monetary policy management, over the past years, the SBV has conducted the monetary policy tools in a coherent, flexible and synchronized manner, aiming at controlling the inflation and maintaining it at a low level. In terms of the monetary policy management, the SBV has been consistent with its outlook that holding the VND is more beneficial than holding the USD. Therefore, in 2010, the SBV applied the ceiling interest rate of 1% per year applied to USD deposits of institutional customers in 2010, and 3% per year applied to individual customers’ deposits in 2011, and then gradually adjusted it down to 0% per year since the end of 2015.
An overview of the meeting
According to the SBV Deputy Governor, the application of the 0% interest rate policy for the USD deposits has been one of the synchronized measures implemented by the SBV to maintain the stability of the foreign exchange market, improving the position of the VND. Thereby, the exchange rate and the foreign currency market has been stable, and the dollarization has decreased significantly.
The inflation has been controlled at a low level, improving the value of the VND, and transforming the USD available among the people into a source of capital to support the economy.
In addition, through its anti-dollarization efforts, the SBV has gradually shifted from the relationship of mobilization-lending to foreign currency buying-selling. The mobilized foreign currencies can now meet the demand for foreign currencies in the domestic market. That is reflected through the ratio of credit over the mobilized foreign currencies of below 100%, and it has kept decreasing over the years, from 77.43% in 2016 to 52.65% in June 2024.
At the meeting, the domestic economists also highly praised the SBV’s 0% interest rate policy applied to the USD deposits, thereby helping to maintain the stability in the forex market, reducing the dollarization ratio, increasing the state foreign currency reserves, and making positive impacts on the remittance, as well as the FII and FDI capital flows.
Toward the end of the meeting, Deputy Governor Pham Thanh Ha once again confirmed that anti-dollarization is a cross-cutting objective and a long-term orientation that the SBV should continue to implement. Through the practical management, the objective of anti-dollarization has been implemented successfully. The 0% interest rate policy applied to the USD deposits has been a key pillar in the anti-dollarization policy, supporting positively the stability of the money market, the exchange rate, and the macro-economy.
About the future orientations, the SBV Deputy Governor also shared that the SBV would continue to manage the monetary policy tools in a synchronous and flexible manner, in close collaboration with other macro policies, in order to achieve the objectives of maintaining the macro-economic stability, controlling the inflation, being consistent in gradually shifting from the relationship of mobilization-lending to the foreign currency buying-selling, anti-dollarization in accordance with the Government’s policy.
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