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Overnight interbank interest rate surges in week
Vietnam News - 4/10/2023 2:17:26 PM
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The average overnight interbank interest rate surged on April 6 by 0.20-1.22 percentage points for all terms under one month to reach 4.47 per cent per year after declining significantly at the end of March, according to the latest data by the State Bank of Việt Nam (SBV).
The rate is double the figure from the beginning of the week and four times higher than the previous week.
On March 30, the average overnight interbank interest rate dropped sharply to 0.9 per cent per year from more than 6 per cent in February.
However it went up again to 1.12 per cent per year on March 31; 2.12 per cent on April 3; 2.48 per cent on April 4; and 3.41 per cent on April 5.
On the open market operation (OMO) channel, the SBV on April 6 offered a 28-day OMO bid worth VNĐ10 trillion (US$427.6 million) for mortgage loans of valuable paper with an interest rate of 5 per cent per year (down from the previous 5.5 per cent) to support longer-term liquidity for commercial banks.
Earlier, Nguyễn Thị Hồng, governor of the SBV, said the central bank bought $4 billion in the first quarter to support liquidity for the banking system, which has exceeded VNĐ50 trillion ($2.14 billion).
Deposits in the banking system have also surged after Tết (Lunar New Year).
Due to abundant liquidity and low credit demand, deposit interest rates at commercial banks have dropped rapidly over the past few months.
Banks began reducing deposit interest rates in February. To date, only ABBank has listed an interest rate of more than 9 per cent per year for a 12-month term.
Compared to the peak level recorded in mid-January, the deposit interest rates listed at commercial banks have decreased by 0.5-1.5 percentage points for all terms.
The SBV may further reduce operating interest rates in coming times, experts said.
Over the past month, the SBV has cut policy interest rates twice in a bid to boost economic growth.
In a recent report, the Maybank Investment Bank forecast the SBV will likely cut the policy interest rate by 50 basis points in mid-2023 and another 50 basis points in early 2024.
It attributed the cuts to the fact that domestic inflation remains moderate (below the 4.5 per cent target set by the SBV) and the US Fed’s monetary policy would be eased in the coming time.
A recent UOB Global Economics & Markets Research report has also predicted the central bank will continue cutting policy interest rates for the rest of the year.
Experts said to achieve the growth target of 6.5 per cent for 2023 as set by the Government, the Government needs to reduce interest rates.
A lower interest rate environment will help businesses and people reduce lending costs, thereby promoting investment, production and business activities, they said.
However, experts said the room for the SBV to continue reducing interest rates is not much as Việt Nam previously maintained low interest rates and increased rates by only 2 per cent in the past two years, they said.
They recommended the SBV use a combination of other measures, such as expanding OMO liquidity, buying more US dollars and providing special refinancing, to support liquidity for the banking system.
The loosened monetary moves need to be carried out in parallel with small adjustments to minimise adverse impacts on the foreign exchange rate and inflation, they added. — VNS
Read original article here
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