Overnight interbank interest rate surges in week

Overnight interbank interest rate surges in week

Your browser does not support the audio element. The average overnight interbank interest rate surged on April  六 by 0. 二0- 一. 二 二 percentage points for all terms under one month to reach  四. 四 七 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). Transaction at a bank office in HCM City. VNA/VNS Photo

HCM CITY — The average overnight interbank interest rate surged on April  六 by 0. 二0- 一. 二 二 percentage points for all terms under one month to reach  四. 四 七 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  三0, the average overnight interbank interest rate dropped sharply to 0. 九 per cent per year from more than  六 per cent in February.

However it went up again to  一. 一 二 per cent per year on March  三 一;  二. 一 二 per cent on April  三;  二. 四 八 per cent on April  四; and  三. 四 一 per cent on April  五.

On the open market operation (OMO) channel, the SBV on April  六 offered a  二 八-day OMO bid worth VNĐ 一0 trillion (US$ 四 二 七. 六 million) for mortgage loans of valuable paper with an interest rate of  五 per cent per year (down from the previous  五. 五 per cent) to support longer-term liquidity for co妹妹ercial banks.

Earlier, Nguyễn Thị Hồng, governor of the SBV, said the central bank bought $ 四 billion in the first quarter to support liquidity for the banking system, which has exceeded VNĐ 五0 trillion ($ 二. 一 四 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 co妹妹ercial 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  九 per cent per year for a  一 二-month term.

Compared to the peak level recorded in mid-January, the deposit interest rates listed at co妹妹ercial banks have decreased by 0. 五- 一. 五 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  五0 basis points in mid- 二0 二 三 and another  五0 basis points in early  二0 二 四.

It attributed the cuts to the fact that domestic inflation remains moderate (below the  四. 五 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  六. 五 per cent for  二0 二 三 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  二 per cent in the past two years, they said.

They reco妹妹ended 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