Due to the bidding results on the open market operation (OMO), from the end of this week to the middle of this week, there were four consecutive sessions of the State Bank of Vietnam (SBV) lowering the volume of treasury bills to withdraw money. Previously, the operator continuously maintained the bid size of 18 trillion dong bills per session, to neutralise a large amount of money offered to buy foreign currencies earlier.
However, as above, the market had recorded four consecutive sessions of offering scale reduced to 15 trillion dong per session, remaining seven-day term with a constant interest rate of 2.25 percent per year. In line with the issuance volume of 18 trillion dong per day before maturity, the amount of net injection through each session was 3 trillion dong.
With this change in balance, in the past four sessions (as of October 23), there had been a regular amount of 3 trillion dong injected by SBV every session. The outstanding treasury bills also decreased from 90 trillion dong last week to 78 trillion dong.
In the balance of recent years and until then, when buying a large amount of foreign currency, at the same time, SBV issued treasury bills to withdraw money and neutralise the impact of that money supply. This amount of money was gradually absorbed into the market.
Particularly, before a large amount of foreign currency, SBV purchased tenors to extend the dong supply instead of accumulating immediately.
As recently updated by SBV, as well as clearly shown in the interbank market, the system liquidity was plentiful and showed a temporary surplus.
Dong interest rate in the interbank market had been in a steady downward trend since the beginning of October. As of October 23, it continued to decline at all terms in the market, in which overnight was only 1.75 percent, the one-week term was 1.93 percent, two-week term was 2.15 percent, and a month term was 2.48 percent per year.
The above dong interest rate continued to be lower than the US dollar interest rate in the same market and for overnight, one and two-week terms (the average USD interbank interest rate on October 23 overnight was 1.97 percent, the one-week term was 2.1 percent, the two-week term was 2.21 percent per year).
