The State Bank of Vietnam (SBV) has cut interest rates on US dollar deposits to near zero to prevent dollar hoarding.
It said in a statement on Sunday the interest rate ceiling on dollar deposits by individuals will be lowered to 0.25% from 0.75%, while the cap on the interest rate offered by local banks will be reduced zero percent from 0.25% for corporate depositors.
The decision takes effect September 28 and is aimed at preventing hoarding of foreign currencies, the SBV said, adding the move was in line with the development of the country's money and foreign exchange markets.
The value of the US dollar has been steadily rising against the Vietnam Dong, a trend expected to continue until year's end.
A representative from Phu Nhuan Jewelry Joint Stock Company said lowering US dollar deposit interest rates may drive investors to buy more gold as a safe haven, which may be reflected in a spike in gold prices in coming weeks.
