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Many banks have raised deposit rates over the past few weeks to improve liquidity amid the pressure of a stronger US dollar.

Vietnam Bank for Agriculture and Rural Development (Agribank) was the latest among them to take the measure, raising its long-term Vietnamese dong deposit rates by 0.3-0.5 percent per year as of June 2.

Accordingly, Agribank raised deposit rates for individuals from 6.2 percent to 6.5 percent per year for an 18-month term and from 6.3 percent to 6.8 percent per year for a 24-month term. For organisational customers, the bank also lifted its 24-month deposit rate from 6.3 percent to 6.8 percent per year.

Previously, Asia Commercial Bank (ACB) also lifted its deposit rates for 6-36 months by 0.2 percent from May 25. The deposit rate for the 36-month term is the highest, 6.7 percent per year. Meanwhile, the 12-month and 24-month rates are at 6.2 percent and 6.5 percent per year, respectively.

Similarly, on May 21, Eximbank raised its deposit rates for some terms and the highest rate of 6.9 percent has been for a 36-month term. Meanwhile, the 18-month and 24-month rates are at 6.6 percent and 6.7 percent, respectively.

Several other banks have also lifted deposit rates slightly.

ACB's Chief Executive Officer (CEO) Do Minh Toan told the online newspaper Vnexpress that the move was just to balance capital source and will not affect lending rates considerably.

According to Tuoi tre (Youth) newspaper, Truong Van Phuoc, Vice Chairman of the National Financial Supervision Commission (NFSC), attributed that banks had raised deposit interest rates to improve liquidity and this was a normal action and not a basis for them to hike lending rates accordingly.

Financial expert Nguyen Tri Hieu observed that although inflation remained stable, with CPI in May rising 0.16 percent over the previous month and up 0.95 percent year-on-year, somehow a stronger US dollar recently affected capital mobilisation as some people withdrew their dong savings to buy the dollar; hence, banks had to raise dong deposit rates to attract capital.

Last week, the National Financial Supervisory Commission (NFSC) said that deposit rates were under pressure and set to rise as the growth rate of deposits had been lower than that of credit.

According to the NFSC, total deposits rose 0.98 percent in the first quarter, in which deposits in the dong rose 1.9 percent and deposits in foreign currencies fell 4.9 percent. Total outstanding loans, meanwhile, increased 1.7 percent, in which outstanding loans in dong climbed 2.4 percent and outstanding loans in foreign currencies dropped 0.9 percent.

As a result, the loan to deposit ratio (LDR) rose to 84 percent from 83 percent in December 2014, of which LDR in foreign currencies climbed to 87 percent from 83.4 percent at the end of 2014, the NFSC reported.

Source: VNA