Vietnam: Interbank interest rates stay high
The liquidity of the banking system was tighter last week when the interbank interest rate exceeded 7.5%, the highest level since 2012, SSI Securities Company (SSI) reported.
The overnight interest rate in the trading session ending last week rose 40 basis points to 4.9%, while rates for one- to four-week terms ranged around 5.1% to 5.3%, increasing 47 basis points.
The rates for overnight, one- and two-week terms last week to a 10-year high, Bao Viet Securities Joint Stock Company said in a recent report.
According to SSI, the central bank’s U.S. dollar sale led to cash flowing out of the system, pushing interbank interest rates up and putting pressure on the system’s liquidity.
However, liquidity later improved thanks to the State Bank of Vietnam (SBV) pumping a large amount of money into the market through the purchase of U.S. dollar funds from commercial banks and open market operations, helping lower interbank interest rates.
Meanwhile, the SBV’s move to increase the selling price of the U.S. dollar by VND300 to VND23,700 exerted pressure on the exchange rate, the third increase in the selling price of the greenback since the beginning of this year.
The central bank has also withdrawn a net value of over VND75 trillion via treasury bills, open market operations and U.S. dollar sales, affecting the liquidity of the banking system due to pumping and withdrawing activities as well as interbank market volatility.
Source: Saigon Times