Source: SBV
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On March 14th, the State Bank of Vietnam (SBV) continued to raise 15 trillion VND through 28-day treasury bills at an interest rate of 1.4% per year. The maturity date for these treasury bills is April 11th, 2024, at which point the 15 trillion VND will be returned to SBV.
Over the course of 4 consecutive sessions, the central bank has raised nearly 60 trillion VND through treasury bills. On March 14th, the winning interest rate for the treasury bills was lower than the average interbank overnight interest rate (which stood at 1.47% per year on March 12th).
In addition, there were 11 credit institutions participating in the auction, with 10 winning bids. This indicates a decrease in excess liquidity in the market.
Prior to this, the central bank had auctioned a total of nearly 45 trillion VND in 28-day treasury bills over 3 consecutive days (March 11th-13th) at a fixed winning interest rate of 1.4%. Furthermore, the interbank interest rate for VND overnight and short-term loans has started to gradually increase after the central bank’s issuance of treasury bills.
According to analysts, although the central bank is raising liquidity through treasury bills, the macroeconomic conditions in March 2024 are completely different from those in September 2023. At that time, there were concerns over exchange rates, US interest rates, and even war. The continuous hawkish stance of the US Federal Reserve on interest rates caused global stock markets to continuously decline without a stopping point.
However, these issues have been partially resolved at present. Evidence of this is the economic indicators in the US that have prompted the Federal Reserve to announce a gradual interest rate cut this year. The tension in the trade war has also eased.
In conclusion, the central bank’s decision to restart the issuance of treasury bills is taking place in the context of excess liquidity and the reversal of credit growth in the early months of the year. The pumping and absorption of money is just a business story that happens regularly.
By Khang Di
