Illustrative image (Source: Internet) Hanoi (VNA) - Since mid-February interest rates on VND loanson the inter-bank market have surged, somewhat surprising analysts sinceliquidity at most banks is pretty steady.
In the first week of March interbank rates for all tenors went upby 30-70 basis points from less than 4 percent.
In fact, the average interest rate on the interbank market roserather sharply, especially for overnight loans, by 0.66 percent a year to 4.22 percent.
The rates for one-week and two-week loans went up by 0.36 percentand 0.28 percent to 4.32 percent and 4.44 percent per year, while one-monthrates hardened by 0.3 percent to 4.74 percent.
Some analysts said though liquidity in the banking sector is stillhigh, it has reduced a bit.
They pointed to the fact that the State Bank of Vietnam has beeninjecting money steadily in recent times through open market operations (OMO).
According to Bao Viet Securities Company, between February 20 and24 the central bank pumped in 15.715 trillion VND (698.4 million USD) throughOMO. Meanwhile, bonds worth 5.036 trillion VND have matured.
Also during this period the central bank issued seven- and 14-daytreasury bonds worth 7 and 9 trillion VND, while bonds worth 49.9 trillion VNDfell due.
This means a total 33.9 trillion VND was pumped into the economyvia treasury bills.
Rising interest rates on the inter-bank market has helpedstabilise the dollar-dong exchange rate after a strong rise by thedollar in recent times.
Many analysts opined that the higher inter-bank rates would notlast long, and expect them to fall sharply right in the end of the firstquarter.
Others said the increasing rates are not a cause for concern sincethe inter-bank rates remain below the levels that require the central bank tointervene.
Besides, the banking sector’s loans-to-deposits ratio remains at80-85 percent, meaning liquidity is good.
In other words, the increase in the inter-bank rates is merelyseasonal, they said.
In the early part of the month credit institutions often parktheir money with the SBV to meet compulsory reserve requirements, and in thelatter part actively lend money.
That is why inter-bank interest rates often rise in the first andsecond weeks of a month and decrease later on.-VNA
In the first week of March interbank rates for all tenors went upby 30-70 basis points from less than 4 percent.
In fact, the average interest rate on the interbank market roserather sharply, especially for overnight loans, by 0.66 percent a year to 4.22 percent.
The rates for one-week and two-week loans went up by 0.36 percentand 0.28 percent to 4.32 percent and 4.44 percent per year, while one-monthrates hardened by 0.3 percent to 4.74 percent.
Some analysts said though liquidity in the banking sector is stillhigh, it has reduced a bit.
They pointed to the fact that the State Bank of Vietnam has beeninjecting money steadily in recent times through open market operations (OMO).
According to Bao Viet Securities Company, between February 20 and24 the central bank pumped in 15.715 trillion VND (698.4 million USD) throughOMO. Meanwhile, bonds worth 5.036 trillion VND have matured.
Also during this period the central bank issued seven- and 14-daytreasury bonds worth 7 and 9 trillion VND, while bonds worth 49.9 trillion VNDfell due.
This means a total 33.9 trillion VND was pumped into the economyvia treasury bills.
Rising interest rates on the inter-bank market has helpedstabilise the dollar-dong exchange rate after a strong rise by thedollar in recent times.
Many analysts opined that the higher inter-bank rates would notlast long, and expect them to fall sharply right in the end of the firstquarter.
Others said the increasing rates are not a cause for concern sincethe inter-bank rates remain below the levels that require the central bank tointervene.
Besides, the banking sector’s loans-to-deposits ratio remains at80-85 percent, meaning liquidity is good.
In other words, the increase in the inter-bank rates is merelyseasonal, they said.
In the early part of the month credit institutions often parktheir money with the SBV to meet compulsory reserve requirements, and in thelatter part actively lend money.
That is why inter-bank interest rates often rise in the first andsecond weeks of a month and decrease later on.-VNA
VNA
