Vietnam Money-Dong surplus emerges as banks boost rates

HANOI, July 14 (Reuters) - Some Vietnamese banks increased their deposit rates in the past week to help raise dong funds above minimum reserve requirements.

Banks raised one-year dong deposit rates to 17.3-19.1 percent from a week-earlier range of 17 percent to 18.5 percent, the State Bank of Vietnam, or the central bank, said in its monetary market review.

The country's top four lenders widened one-year dong lending rates to 15-20 percent from 15-18 percent in late June. Overnight lending rates rose slightly to between 14-18 percent from 14-16 percent on June 30 VNIBOR.

Other banks mostly offered loans at the ceiling level of 21 percent, the central bank said.

By end of last week, larger banks reported a surplus against their reserves kept at the central bank, the review said, while smaller banks found it hard to meet the reserve requirement in place since February and some unidentified banks even failed to meet the requirement.

The central bank said it continued buying short-term debt via open market transactions to ensure liquidity and help banks meet strong corporate demand. [ID:nHAN122124]

The central bank said foreign exchange spot rates quoted between banks and those on the unofficial market had reduced significantly.

The dollar fell to 17,050-17,150 dong on July 10 on the free markets from 17,250 dong on July 7, while interbank markets kept the hard currency stable at 16,840-16,849 dong last week <VND=>.

The central bank said banks have sold foreign currencies to individuals to help with their overseas medical treatment, study or business trips, while the central bank has also tightened rules on how forex dealing agents can operate.