Image

11/01/2024

Interest rates and exchange rates will be stable

Dr. Tran Du Lich, member of the National Assembly Economic Committee and a member of the National Financial and Monetary Policy Advisory Council, said that inflation for the whole year can be controlled at 8%, so the trend The interest rate direction from now until the end of the year will be stable and it is unlikely that lending interest rates will fall deeply compared to current levels. At the same time, deposit interest rates are also difficult to change. DTCK had a discussion with Mr. Lich about this issue.

Please let us know your opinion on the possibility of inflation in the last 2 quarters of the year and the forecast for the whole year at what level it will be controlled?

In my opinion, inflation this year will likely be controlled at about 8% as set target. Therefore, from now until the end of the year, I think that both interest rates and exchange rates will not fluctuate. It is also unlikely that lending interest rates will decrease further than current levels. As for deposit interest rates, it will be stable.

In your opinion, is the current agreed interest rate suitable for businesses to access loans to expand production and business?

Businesses always expect low interest rates, but in reality, meeting this is not easy. Although the Government's policy is to reduce negotiated loan interest rates, solving this problem depends on factors such as confidence in controlling inflation from now until the end of the year.


Second is the available space, which means the total money supply as well as the total credit that the State Bank of Vietnam (SBV) can provide to the economy this year. If we comply with the State Bank's target of controlling credit growth in 2010 at 25%, it is unlikely that interest rates will fall deeply compared to the current level. That means the role of the State Bank in refinancing and open market operations is to match the total money supply as well as credit growth, because reducing interest rates will lead to an increase in credit supply.

In addition, the pressure of reduced capital demand puts pressure on banks to adjust interest rates. The third factor that also makes an important contribution to cutting interest rates is to reduce interest rates on government bonds issued. Because in principle, government bonds are always considered the safest, the interest rate must be lower than the deposit interest rate of banks.

If these three factors are implemented, loan interest rates can be further reduced. However, I don't think interest rates will decrease much more, because in reality interest rates also depend on the "bottom" and "ceiling" - which is the inflation index. Currently, if we take into account the depreciation of the currency, the interest rates on bank deposits are actually positive, although not large.

Growth in credit balance of the entire industry in the first 6 months of the year reached 10.56% compared to this year's target of about 25%. In your opinion, is it suitable for the current situation?

In the first two quarters of this year, credit growth was not high, because capital needs of businesses were moderate and not like the same period last year. On the other hand, in reality, in the past few years, outstanding credit debt only grew rapidly in a few months. Capital demand in the last 2 quarters will be higher than the first 6 months of the year. I believe that with the goal of controlling credit growth of about 25% and with the current management style, it is achievable.

But with current market developments, businesses are still hesitant about using loans, because they think that profitability is not much higher than interest rates?

With the current interest rate level, many businesses consider it high. But we should know that, currently, loan capital is mainly short-term to buy raw materials and pay workers' salaries, not to buy machinery and equipment. Thus, depending on the contract, business project, feasibility and profitability..., businesses will continue to borrow. As for businesses borrowing capital for long-term investment, with current interest rates, they also face some difficulties.


Therefore, it is this high interest rate level in the short-term market that will affect the long-term investment expectations or willingness of businesses. Because basically, if we want businesses to invest long-term, the important issue is that we must first control inflation to be able to reduce interest rates and for businesses to borrow long-term capital. In the current context, when we are still concerned about and dealing with inflation, it is difficult to talk about the growth of medium and long-term credit balance.

According to Securities Investment Newspaper

 

Image
icon
icon