HCMC – Foreign business associations have proposed the State Bank of Vietnam (SBV) remove the U.S. dollar interest rate cap at 0%, reported the local media.
Speaking at the Vietnam Business Forum in Hanoi on March 19, these associations suggested using other tools to discourage individuals and organizations from depositing dollars at banks.
The Korean Chamber of Commerce and Industry in the South and Middle of Vietnam (KoCham) said the U.S. dollar interest rate cap had been in force since December 2015 and that this rule had led to foreign companies in Vietnam bearing opportunity costs as dollar savings and deposits brought no interest.
South Korean-invested businesses in Vietnam usually import raw materials from overseas, then export finished products to international markets, making it necessary for these companies to keep a balance in their escrow accounts in U.S. dollar.
Sharing the same view, the British Chamber of Commerce Vietnam (BritCham), said that limiting the dollar interest rate at 0% had forced exporting firms to repatriate large sums of foreign currency overseas, instead of keeping those amounts in Vietnam.
Due to these reasons, KoCham and BritCham proposed the central bank remove the U.S. dollar interest rate cap on enterprises that deposit U.S. dollars at a local bank and foreign-invested businesses.