Vietnam loan growth slowed in January and dong lending slipped as businesses sought dollar loans and sold dong to take advantage of a gap between local currency and dollar rates, central bank data showed.
Bank loans rose 0.43 percent month-on-month in January, slowing from a monthly expansion of 2.28 percent in December, the State Bank of Vietnam said in its monthly report for January.
Dong lending slipped 0.09 percent from December while dollar loans rose 2.37 percent, it added, without giving values.
The gap in lending rates between the domestic currency and dollar has been hovering at around 10 percentage points, bankers said, echoing a similar situation in the first quarter of 2010 when dollar loans jumped 14.07 percent from December 2009 versus a rise of 0.57 percent in dong lending.
Business executives have also complained about high dong loan rates of 18-20 percent, which they said encouraged them to deposit cash in banks instead of expanding operations.
Money supply last month fell 0.33 percent from December, and deposits also dropped 2.46 percent, the report said.
The central bank has projected Vietnam's credit growth this year to slow to 23 percent to control inflation, after a rise of 27.65 percent in 2010. Money supply growth is also projected to slow to 21-24 percent in 2011 from a rise of 23 percent in 2010.