The weekly capital market report for the week of March 25th 29th by Saigon Securities Incorporation (SSI) pointed out that the SBV net injected 32.6 trillion dong via bill channel. Meanwhile, there were 37.5 trillion dong of bills matured and 4.9 trillion dong of bills sold; and the net withdrawal on Open Market Operation (OMO) was 1.094 trillion dong. Thus, the SBV net injected 31.5 trillion dong to the market to cool down the liquidity tension.
Overall, the SBV net injected 31.506 trillion dong on the OMO market, raising the supply.
Meanwhile, interest rates on the interbank market soared by 0.58 to 0.67 percentage point across the terms to 4.3 percent per annum on overnight term, 4.33 percent per annum on one-week term, widening the dong-US dollar interest rate gap to 1.7-1.8 percent per annum for terms of one month and less.
According to SSI, the continuous withdrawal of more than 187 trillion dong in six consecutive weeks and the increase in payment demand for valuable papers of state-owned commercial banks have made the supply of dong to go down on the interbank market were the main causes of the interbank rate rise.
However, SSI said that the developments in the past week were only temporary and the interbank rates will cool down when the quarter ends.
On market 1, the interest rates recorded increase of 0.2 0.3 percentage point on six to nine months at some commercial banks. The current deposit rates are still maintained at 4.3 5.5 percent per annum on terms from one to less than six months, 5.5 5.7 percent per annum on terms of six months to less than 12 months, and 6.4 eight percent per annum on terms of 12 and 13 months.
According to the SBV, credit of the entire sector increased by 2.28 percent from the beginning of the year until March 25th 2019, while the total means of payments rose up by 2.67 percent. These growth rates are significantly lower than the growth in the same period of 2018, which were respectively 3.56$ and 4.01 percent.
With the orientation of growing credit by 14 percent in 2019, similar to 2018, credit is likely to be accelerated in the second quarter, leading to the rise in demand for capital mobilisation and maintaining interest rates at the current levels, stated SSI.
Last week, the US dollar/dong dropped by five dong per US dollars on both buying and selling rates, reaching 23,150/23,250 dong per US dollar at banks, but went up by 10 dong per US dollar on buying rate and five dong per US dollar on the free market, reaching 23,195/23,205 dong per US dollar. The central reference exchange rate was raised by an addition of 23 dong per US dollar to 22,980 dong per US dollar after a week of levelling off.
According to the Ministry of Planning and Investment, from the beginning of the year until March 20th, Vietnam attracted 785 newly licensed Foreign Direct Investment (FDI) projects with registered capital of 3.82 billion US dollars (up by 80 percent over the same period of last year). The registered capital contribution and share purchase reached 5.69 billion dong (three times higher than the same period of 2018). The FDI disbursement was 4.1 billion USD (up by 6.2 percent).
“The abundant foreign currency supply in the recent period has facilitated the SBV to continuously buy in US dollars to raise foreign exchange reserves. In addition, since the trade balance in the first three months of the year was in a surplus of 536 million US dollars, the current dong-US dollar interest rate difference remains high and the US dollar Chinese yuan is stable, the pressure on the US dollar/dong exchange rate is currency very low. Thus, the dong will fluctuate at around 23,200 dong per US dollar,” assessed SSI.
