HANOI, Jan 18 (Reuters) – Vietnam’s central bank said on Monday it would cut the compulsory reserves banks must keep on non-term foreign currency deposits and on those with terms of up to 12 months to 4 percent from 7 percent.
A central bank statement also said the compulsory reserves on foreign currency deposits with terms longer than 12 months would be cut to 2 percent from 3 percent.
The changes take effect on Feb. 1, the State Bank of Vietnam said.
The lower reserve requirements, the first sign of monetary easing this year by Vietnam’s central bank, means banks will have more dollars to put into circulation since they will have to park smaller amounts in accounts at the central bank.
“This move means the dollar is becoming cheaper,” a dealer at a foreign bank in Hanoi said. “It appears that with this move, the central bank may want to shift credit growth into dollars.”
The central bank has projected credit growth in 2010 of 25 percent, after lending accelerated at an annual rate of 37.73 percent last year versus 23.6 percent the previous year.