Preparing for financial turbulence amidst limited options for fiscal maneuvering in Vietnam
In the heart of 2025, Vietnam's economy is experiencing a push to maintain an 8 per cent growth rate, with the State Bank of Vietnam (SBV) playing a crucial role in this endeavour. The banking sector has responded by releasing a substantial credit package aimed at boosting short- and medium-term growth.
However, the SBV finds itself in a challenging position, as it must strike a balance between accommodative measures and safeguarding exchange rate stability. This balance is necessitated by the bank's limited policy space. The USD has appreciated by 2.9 per cent against the VND since the end of 2024, a development that has prompted a warning. If pressures continue to intensify, the SBV may reconsider further interest rate cuts to prevent destabilising the exchange rate.
The VND-USD interest rate differential has widened in early August, and this trend is reflected in the 12-month deposit rate, which increased to 5.07% in the same month. Amid persistently low deposit interest rates, banks have been flexible in implementing policies or applying tiered interest rate structures to attract deposit inflows.
Inflation, however, has remained stable in recent months, with the headline consumer price index staying below 4 per cent on-year for 11 consecutive months through June. Despite this, inflation risks persist, particularly on the demand side. British lender Standard Chartered's economists have revised down their 2025 inflation forecast for Vietnam to 3.5 per cent.
The weakening global growth outlook is adding further pressure on domestic policy efforts. To secure system liquidity, the SBV is expected to continue deploying open market operations and coordinating with the State Treasury deposit channel. An estimated VND180 trillion ($6.92 billion) is maturing on the open market in August.
State-owned commercial banks have largely maintained their deposit rates, while other commercial banks have recorded slight increases. At a meeting with commercial banks in early August, the SBV revealed that the average lending rate across the system had fallen to 6.53 per cent per annum.
The credit-to-deposit balance across the commercial banking system is forecast to improve slightly in August. Public investment disbursement by the end of July had reached almost 44% of the full-year target.
In the realm of savings, the highest interest rate for a 12-month fixed savings period (Festgeld) was 2.30% offered by Renault Bank direkt in August 2025, according to festival interest comparisons. Sparbrief (savings certificate) rates for one year were up to 2.00% to 1.95% at VW Bank and Santander respectively.
Despite the challenges, the SBV remains committed to its role in supporting Vietnam's economic growth while maintaining a stable financial environment. The bank's actions, along with the credit package from the banking sector, aim to spur growth and navigate the complexities of the global economic landscape.
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