Interbank interest rates at 3-month low

Rates in interbank money market at lowest since March.

Interest rates in the interbank money market have come down to less than 3 per cent for the first time in three months since March.

Liquidity has improved without supportive solutions from the State Bank of Vietnam (SBV) through open market operations (OMO) as previously. Interbank rates fell for five straight weeks and this is the second week of a clear downward trend.

Data from Saigon Securities Incorporation (SSI) Retail Research revealed that overnight (O/N), one-week, and one-month term rates were down 1.13 per cent, 0.9 per cent, and 0.79 per cent, respectively, over the previous week.

Specifically, the O/N rate fell from 3.83 per cent to 2.7 per cent and one-week and one-month rates were 2.9 per cent and 3.5 per cent, respectively. The downtrend continued on May 30, with the overnight interest rate falling to 2.56 per cent and one-week interest rate down sharply to 2.6 per cent.

Meanwhile, one-month interest rate rose slightly, to 3.58 per cent and three-month interest rates remained unchanged at 4.2 per cent. The SBV continued to draw money on the open market. In the past week, the SBV issued VND2.175 trillion ($95.8 million) through OMO, while VND4.744 trillion ($208.9 million) matured, corresponding to a net withdrawal of VND2.569 trillion ($113.1 million) from the system. The amount of OMO in circulation declined to VND2.175 trillion ($95.8 million).

The volume of OMO pumped in to support liquidity recently has been almost fully absorbed, with system liquidity gradually regaining equilibrium. If liquidity continues to be oversupplied, the SBV will be able to issue bills to draw money back to similar levels in 2016, according to SSI Retail Research.

by My Van / VET