Once again from the beginning of the year, Vietnamese credit institutions face problem of capital supply and demand. The borrower must accept high interest rate.
As BizLIVE mentioned recently, at the end of June, the interbank market was different from the previous stable trading.
VND interest rate on the interbank market increased for a week, in which overnight interest rate from 3.1 percent per year, before it reached around four percent per year. At the pledging channel, the State Bank of Vietnam (SBV) suddenly suddenly put in 12 trillion dong to support and credit institutions absorbed all.
Last week, that amount of 12 trillion dong was due; Interest rate on the interbank market also decreased and gradually balanced with the previous stable range.
Noticeably, the above 12 trillion dong was a big difference after a long time SBV only offered a regular bid of 1 trillion dong per session through the pledge channel. And almost no credit institutions borrowed. But at the end of the second quarter, some cases may generate a large demand in balancing capital.
However, while SBV on one hand must issue bills to withdraw money, a part of demand still needed to support capital through the pledge as above. That partly reflected the supplydemand of capital among a part of credit institutions has not really met. This showed that capital supplydemand among a part of credit institutions had not really met.
12 trillion dong supported by SBV via pledge also reflected the phenomenon of having to accept loans with interest rate up to 4.75 percent per year, seven-day term. Meanwhile, if borrowing from other credit institutions, the interest rate in the interbank market was only about four percent per year.
After the above fluctuations and 12 trillion dong matured, last week, VND interest rate on the interbank market have stabilised.
Specifically, in the week from July 1 to July 5, VND interbank interest rates simultaneously decreased in all terms compared to the previous week (down 0.5 to 0.7 percentage points depending on term); closing the trading session at the end of the week: overnight rate of 3.27 percent, one week 3.42 percent, two weeks of 3.55 percent and one month of 3.73 percent per year.
After the previous interest rate fluctuation, with the increasing demand for capital, the outstanding circulating bills of SBV dropped sharply from around 70 trillion dong in the first half of June to 35 trillion dong last week.
Thus, a large amount of capital has been returned and flowed into the market, which was also consistent with the speed of another flow: the lending activity of the system was boosted at the end of June last year, with an increase of credit growth in the first six months reached 7.33 percent (from 6.22 percent updated to June 18, 2019).
