The central bank on March 24 increased the dong's trading band to 5 percent from 3 percent, allowing the currency to slide further from its daily reference rate against the dollar.

Total outstanding loans of local banks by the end of the first quarter increased 2.67 percent compared with the end of last year, according to the statement on the central bank's website. Loans denominated in dong rose 3.9 percent while those in overseas currencies fell 2.4 percent, the statement said.

Total deposits in the banking system rose 3.4 percent in March compared with the end of 2008, the central bank said. Deposits in dong rose an estimated 3.34 percent and deposits in foreign currencies gained about 3.6 percent, it said.

The central bank has also reduced the interest rate it pays on additional, compulsory foreign-currency reserves that banks need to set aside to cover deposits, according to a statement on its website. It reduced the rate from 0.5 percent to 0.1 percent, starting from yesterday, the statement said.

"The rate reduction is to encourage lenders to take their money out to make more loans and investment," said Nguyen Thi Hong, deputy director of the central bank's department for monetary policies.

The government has told lenders to make more and cheaper loans to bolster an economy that expanded 3.1 percent in the first quarter from a year earlier, the slowest pace since quarterly records began in 1999.

Source: Bloomberg