The Research centre of Saigon Securities Incorporation (SSI Research) has released a monetary market report for the week of August 10th 14th. The State Bank of Vietnam (SBV) did not carry out any transaction on the open market operations (OMO) but continuously purchased foreign currencies in the last two weeks. It means that a large amount of dong was pumped into the banking system. The liquidity of commercial banks remained very abundant, while the interbank interest rates went sideways at 0.26 percent per annum on overnight term and 0.35 percent per annum on one-week term.
From the beginning of the year to the end of July 28th, credit only increased by 3.45 percent (while it was 7.31 percent in the same period of 2019). In the context when the credit growth is stagnant and businesses are still struggling due to the second wave of the Covid-19, the SBV has issued Document No.5596 requiring credit institutions to cut operating costs, reduce salaries and bonuses, and lower profits to further cut the real lending interest rates for both existing and new loans.
The deposit interest rates, after the strong and simultaneous reductions in June and July, have now slowed down at 3.15 4.25 percent per annum for terms from one to less than six months, 4.4 6.5 percent per annum for terms from six to less than 12 months, five to 7.3 percent per annum for terms of 12 and 13 months. SSI Research said that from now until the end of the year, the interest rates may fall further by about 50 70 basis points for terms of less than 12 months and 20 30 basis points for terms from 12 months or more.
