According to experts, the interest rate in 2022 is difficult to reduce further than the end of 2021 and is likely to increase slightly (around 0.25%-0.5%) in the second half of the year.

According to the latest data from the State Bank, credit growth in the first month of this year reached 2.74%, or more than 5 times higher than the same period last year. This is also the strongest credit growth in the past 10 years.

According to the Macroeconomic Report of Bao Viet Securities Company (BVSC), as of the end of January, the deposit interest rate for the 12-month term continued to increase slightly by 0.002 percentage points, to 5.552%. This is the 3rd month in a row that deposit interest rates have increased slightly. However, over the same period, deposit interest rates still recorded a decrease of 13 percentage points.

Also according to Bao Viet Company, inflation pressure has shown signs of heating up, while major central banks around the world are also raising interest rates, which may put upward pressure on interest rates in 2022. However, the fact that the CPI can still be kept under control below 4% along with the orientation to support the economy to recover after the pandemic will help Vietnam's interest rates not be under too much pressure this year.

BVSC assesses that the interest rate level in 2022 is difficult to decrease further than the end of 2021 and is likely to increase slightly (around 0.25% - 0.5%) in the second half of the year.

Regarding the USD/VND exchange rate market, BVSC also of the opinion that as of the end of January, the central exchange rate and the actual USD/VND exchange rate at commercial banks had the same downward trend compared to the previous month, at 0.2% and 0.7% respectively. Compared to the end of January 2021, these two types of exchange rates have also decreased by 0.26% and 1.67%.

In January, the State Bank made a move to reduce the buying price of foreign currencies, for the first time in 2022, with a decrease of VND 100, from  VND 22,650/USD to  VND 22,550/USD. This movement has partly supported the exchange rate which dropped in January.

“Abundant foreign currency supply in 2021, when Vietnam has a trade balance surplus, disbursed FDI and positive remittances (estimated to increase by 10% YoY) have helped the State Bank to reduce the buying price of USD in the context of increasing DXY”, BVSC assessed.

Kylie Nguyen