The State Bank of Vietnam (SBV) continued on Tuesday pumping nearly VND2.4 trillion into the banking system via open market operations (OMO) after a VND3.5 trillion injection via a tender on Monday, according to local banks.
The central bank maintained the interest rate at 8% per annum for the seven-day tenor on the open market.
However, SBV from now to the end of this week has to withdraw over VND23 trillion on OMO as last week’s loans fall due. The total volume of money on OMO as of the end of Monday had amounted to over VND26.7 trillion.
The central bank’s moves help to improve liquidity at banks, local lenders explained.
Last week, SBV posted a net injection of over VND23.3 trillion via OMO, the largest since January. Asia Commercial Bank (ACB) alone borrowed VND10 trillion, or 42.8% of the total.
However, the interest rates on the inter-bank market fell slightly on Tuesday with those for short tenors under one month falling. Interest rates for overnight and one-week terms were 6-6.5% per year while the one-month rate was 8-8.5%.
The inter-bank market has turned stable again but banks stay cautious, making both supply and demand rise. This suggests that the central bank’s actions have helped ease liquidity pressure at banks.
Interest rates on the inter-bank market are normally up at month-end but news related to ACB strongly impacted on the market last week.
Banks estimated that inter-bank rates would not fall this week as most lenders will reduce supply to secure liquidity. Besides, ACB might have withdrawn parts of VND36 trillion it had offered on the inter-bank market as the loans fell due.
Therefore, the central bank may continue to pump money via OMO but less than in the previous week.
The Saigon Times Daily