“Interbank Overnight Rates Plummet as Liquidity Pressure Eases”

Specifically, between November 4-11, the SBV lent commercial banks VND 105,000 billion through the 7-day term buying channel at an interest rate of 4%/year.

Meanwhile, the regulator only issued a modest amount of bills worth VND 4,450 billion in the 28-day term. The winning interest rate was fixed at 3.9%/year.

On the other hand, during the period from November 4-11, the weekly pledge channel loan (October 28-November 4) matured, sucking VND 64,000 billion in liquidity out of the market. In contrast, VND 14,000 billion worth of bills issued in the previous week (October 21-28, 2024) matured and were pumped back into the market.

Thus, the SBV net injected VND 50,550 billion of liquidity into the system through the open market operation channel. Of this, VND 75,000 billion was circulating in the pledge channel and VND 74,150 billion worth of SBV bills were circulating in the market.

According to SSI Research, the overnight interbank interest rate surged to 6.1% in the first session of the week on November 4. Unlike the movement of interbank interest rates at the end of October (mainly due to exchange rate pressure), the “jerk” of interbank interest rates last week was mostly due to the local liquidity shortage.

Thanks to the proactive support of liquidity through open market operations, the overnight interbank interest rate quickly cooled down by the end of the week (November 8), reaching only 4.55%/year (up 50 basis points compared to the previous week). The VND-USD interest rate spread has turned positive.

Source: SSI Research

Also according to SSI experts, in a report sent to National Assembly deputies, the SBV said that credit growth as of October 31 reached 10.08% – equivalent to a rise of 16.7% over the same period, and maintained the credit growth target for 2024 at about 15%. To ensure macroeconomic balances such as inflation and exchange rates, and lending interest rates have maintained a downward trend in the first ten months of 2024, the SBV said that the interest rate level is difficult to continue to decrease.

In the domestic market, similar to regional currencies and the STB may have completed its foreign currency purchasing needs, the USD/VND interbank exchange rate decreased by 0.4%. However, the exchange rate quoted by commercial banks still traded around the ceiling rate according to regulations throughout the week, while the black market exchange rate rose and fell strongly, reflecting the high demand for USD in the market. Exchange rate pressure will remain as the market is still cautious, awaiting new policies to be introduced by the new US President.

Khang Di

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