According to the capital market newsletter for the week of March 4th to 8th 2019 of Saigon Securities Incorporation (SSI), in the week, the State Bank of Vietnam withdrew 5.011 trillion dong via Open Market Operation (OMO) channel, while the bill channel maintained zero balance with no transaction. After four consecutive weeks of net withdrawal, the value of OMO in circulation decreased sharply from above 150 trillion dong to nearly 14 trillion dong. The overnight interest rate fluctuated around four percent per annum, closing the week at 3.98 percent per annum, down by 17 basis points compared to the end of the previous week.
On market 1, interest rates were kept stable at 4.3-5.5 percent per annum on terms from one to less than six months, 5.5-7.5 percent per annum on terms from six to less than 12 months, and 6.4-eight percent per annum on terms of 12 and 13 months.
Some banks issued deposit certificates or raised deposit rates on long terms of 18, 24 and 36 months. These rates are currently ranging around 7.6-8.6 percent per annum in order to increase long-term deposits.
The ratio of lending on deposits and valuable papers of banks continuously increased with the largest increases seen in small banks.
According to analysts, in the context when the charter capital raising of banks is less favourable, increasing long-term mobilisation is still the quickest and most effective solution to reduce the ratio of short-term funds used for medium and long-term lending. It thus doubles the pressure on interest rates for terms from 12 months and more.
On the foreign exchange market, the US dollar/dong remained the same at 23,150/23,250 dong per US dollar in banks and increased by 10 dong on buying rate and remained unchanged on selling rate on the free market, reaching 23,205/23,220 dong per US dollar. The central reference rate and selling rate of the State Bank of Vietnam (SBV) continued to be raised by 23 dong per US dollar to 22,946 dong per US dollar and 23,584 dong per US dollar.
The SBV continued to buy foreign currency in the early days of March. The analysis team of SSI assessed that the positive prospect of Foreign Direct Investment (FDI) and Foreign Indirect Investment (FFI), the maintenance of the dong-US dollar interest rate difference at 1.5-1.7 percent per annum and the stability of the Chinese yuan will support the stability of the dong in the near future.
