The average interest rate on the inter-bank market continued to decline in the first week of August, according to the State Bank of Vietnam.
The average interest rates for transactions in dong decreased in terms of less than one month, three months and nine months or longer. Overnight, three-week and 9-month terms saw a decrease of 1.04, 1.16 and 1.75 percentage points per annum respectively.
The remaining terms, meanwhile, saw a decrease of between 41 basis points (one-month term) and 90 basis points (one-week and over 12-month terms). Two-month and six-month terms were the only to rise 175 and 39 basis points respectively.
Regarding transactions in the U.S. dollar, the average interest rate for terms of overnight, three weeks, three months and 12 months also slipped during the week, with a fall of between 0.01 of a percentage point (three-week term) and 18 basis points (12-month term). The rate for two-month term, meanwhile, dropped 1.32 percentage points.
In the week, the total trading value in the inter-bank market in Vietnam dong reached around VND133 trillion, averaging out at about VND26.6 trillion per day while that in the U.S. dollar reached VND66 trillion equivalent, an average of VND13.2 trillion per day.
Transactions in the inter-bank market were mainly for short terms. The total transaction volume for short terms in dong reached over VND83 trillion, equivalent to 62% of the total trading value in dong, while short term transactions in the U.S. dollar reached around VND50.7 trillion, 77% of the total trading value in the greenback.
According to Vietnam News Agency, the foreign currency market stayed stable in the week. Liquidity of the whole system improved and banks kept posting net purchases by customers.
The exchange rate is falling on the market. Commercial banks currently quote the exchange rate at around VND20,845 and VND20,875 to the dollar for buying and selling respectively.
Viet Dragon Securities Company in its report on Thursday said that interest rate volatility was not worrisome. Besides, the fact that banks are pushing up credit growth might be the cause of a strong surge in dong transaction volume.
Mixed developments of dong and U.S. dollar transactions are a positive sign for a stable exchange rate, said the stock broker.
“We hope that the exchange rate will not surge sharply from now to the end of this year due to a improved balance of trade, wide differences between dong and U.S. dollar deposit rates, and the country’s rising foreign reserves,” the company said.
The Saigon Times Daily