Bao Viet Securities Company (BVSC) has just released a report on macroeconomics, in which the liquidity of the banking system was abundant in April. BVSC said that in April, the interbank rates remained high during the first week but cooled down towards the end of the month. Specifically, the interest rates for overnight, one-week and two-week terms currently fluctuated from 2.3 percent to 2.6 percent per year.
The liquidity of the banking system is expected to be abundant in May because credit growth will remain weak while a large amount of capital is expected to return to the system this month via the treasury bill issued in February (91-day term). This amount of due capital is estimated at over 120 trillion dong. Accordingly, interbank interest rates will remain at low levels and the ratio of winning government bond bids is likely to improve in May.
Under the impact of the Covid 19 pandemic, BVSC thinks that the demand for loans of businesses will stay relatively weak. Besides, the inflation which tends to decrease rapidly is also a favourable factor to reduce the deposit rates by 0.3-0.5%. On that basis, if the situation of businesses is weaker than expected, it is still likely that the State Bank of Vietnam (SBV) will continue to cut down the regulating interest rate by 0.25-0.5 percent in the near future.
BVSC said that the cooling trend of US dollar in the global market was the main reason for the USD/VND exchange rate to decline in April. Compared to the peak at 102.8 set in mid-March, only USD Index at the end of April decreased by 3.7%. In addition, maintaining the trade surplus (reaching three billion US dollar in the first four months) helped maintain the supply of US dollar. Vietnam’s foreign exchange reserves were estimated at $83 billion, equivalent to 32 percent of GDP.
