Vietnam saw US dollar deposits overseas skyrocketing, possibly due to foreign currency policies implemented by the central bank, the Vietnam Institute for Economic and Policy Research said, VNA reported. According to a report released this week, the think-tank said Vietnamese deposits overseas, which were previously negligible, was $7.3 billion till the third quarter of 2015. While direct and indirect investments remained little changed, the outflow caused the overall balance of payments to post a deficit of $6.6 billion in Q3 of 2015, the report said, adding this could be seen as a forex “liquidity trap” in the local banking system. VEPR Director Nguyen Duc Thanh said the significant rise required close monitoring. According to the report, the absence of an effective dollar trading market, coupled with the 0% interest rate on dollar deposits, had prompted many people to deposit their foreign currency abroad at low interest rates while domestic banks had to borrow from foreign banks at higher interest rates.
