Inter-bank rates hit record low
Following the continuous decline over the past weeks, inter-bank rates across all tenors hit a record low, staying at below 1% per year.
This was disclosed in Bao Viet Securities Co (BVSC)’s report.
According to the BVSC weekly bond news report between August 22 and 26, thanks to abundant liquidity, the inter-bank rates for all tenors last week reduced by roughly 0.5% to 0.59% per year for overnight loans, 0.59% for one-week loans and 0.92% for two-week loans.
Early this year, the inter-bank rate averaged at 5% per year.
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The State Bank of Vietnam (SBV) last week also maintained the net withdrawal status of VND26 trillion (US$1.165 billion) on the Open Market Operation (OMO) through the issue of treasury bonds. According to BVSC, it was the 13th consecutive week that the SBV managed the dong supply and demand through the issue of short-term T-bonds.
BVSC noted that the interest rate of T-bonds also dropped sharply by roughly 0.3% each week during the past month. Currently, the rate of 14-day T-bonds has hit the lowest level of 0.59% per year against the 2.75% reported in June.
“Together with the net withdrawal status on the OMO, the low record of the inter-bank rates showed that the abundant liquidity in credit institutions has not only been maintained, but is also rising further in the past week,” BVSC analysts said.
BVSC also forecast that the central bank is still continuously buying a relatively significant amount of foreign currencies to increase foreign exchange reserves.
“With the abundant liquidity, we expect inter-bank rates will stay at the low level of around 1%-2% per year across all tenors in the next few weeks,” analysts said.
