The first session of the week (April 13th) marked the stop of the State Bank of Vietnam (SBV)’s series of net injection. On the Open Market Operation (OMO), there was no need for injection like the last ten consecutive sessions.
From the session on March 31st until one week later, the liquidity of the banking system appeared to be tense when the dong interest rates unexpectedly rose up, and the SBV had to continuously pump in a large amount of short term capital on the OMO.
However, the net injection slowed down towards the end of the week, and the operator only offered injection of 19 trillion dong and the system only needed to borrow 4.656 trillion dong.
In general, in the recent fluctuation, the SBV net injected a total of 25.493 trillion dong to support the system at interest rate of 3.5 percent per annum on 14-day term.
Along with the above intervention, the dong interest rates on the interbank market also quickly cooled down.
Since the beginning of April, the average dong interbank rates have continuously risen. The overnight rate (the type of rate with the largest daily transaction volume) jumped from one percent to two percent and then 3.5 percent per annum. However, by the end of the week, the market recorded a deep fall to less than two percent per annum.
Thus, after a strong fluctuation in the past ten days, the system’s liquidity has stabilised with the balance of 25.493 trillion dong from the SBV.
In the next few days, a large amount of capital from the SBV’s Treasury bills with a term of 91 days issue from the first session on January 20th 2020will gradually mature from April 20th with a total amount of capital coming back to the market reaching nearly 147 trillion dong.
