According to the capital market newsletter for the week of April 15th to 19th of Saigon Securities Incorporation, except the five trillion dong of bills sold in the session on April 16th, no new transaction was recorded on the interbank market during the whole week. The Open Market Operation (OMO) channel still maintained a balance of zero while bill channel saw a 10.2 trillion dong of maturity, which led to a decrease in the balance of bills to five trillion dong.
“Overall, the State Bank of Vietnam (SBV) net injected 5.2 trillion dong to the market. The accumulated net injection in the past two weeks was 11.806 trillion dong, approximately the same as the net withdrawal recorded in the first week of April 2019. In addition, the increase of deposits from the State Treasury and the further sale of US dollars to the SBV have supported the liquidity of commercial banks,” said SSI experts.
The good liquidity continuously pulled the interbank rates down from 4.37 percent per annum to 4.07 percent per annum on overnight term, and from 4.4 percent per annum to 4.12 percent per annum on one-week term.
On market one, the mobilisation rates were maintained at 4.3-5.5 percent per annum on terms from one month 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.
According to the SSI, the mobilisation rates will stay around the current levels due to three reasons. Firstly, with credit growth target of 12-14 percent, commercial banks still need fund for lending to customers. Secondly, the acceleration of personal loans with better interest rates will be the basis for commercial banks to maintain the current mobilisation rate level. Thirdly, the need to increase the mobilisation balance to meet the roadmap of reducing short-term capital used for medium and long-term lending from the current 40 percent to 30 percent is also a factor that makes it difficult to reduce mobilisation rates.
Although the mobilisation rates have been maintained at new levels (0.5-0.7 percent per annum higher) in the last five months, according to SSI’s observation, the actual lending interest rates have been kept stable at six to nine percent on short terms and nine to 11 percent per annum on medium and long terms. State-owned banks have even lowered lending rates by 0.5 percent per annum for some priority areas.
“Therefore, if there are no big changes to mobilisation rates, lending rates will remain stable, and banks will adapt by adjusting the debt structure, developing service segment, and increasing the efficiency of cost management in order to increase profits,” analysed SSI.
In the past week, the US dollar/dong exchange rate was up by 10 dong per US dollar, reaching 23,160/23,260 dong per US dollar at banks; and up by 15 dong per US dollar on buying rate and 20 dong per US dollar on selling rate, reaching 23,210/23,230 dong per US dollar on the free market.
The central reference rate continued to be raised by two dong per US dollar to 22,998 dong per US dollar.
According to the SSI, currently, the supply and demand of foreign currency has become less favourable after continuously buying a large amount of foreign currency in the early months of the year. Particularly, the trade deficit of 750 million US dollars in the first half of April 2019 also affected the market sentiment. In addition, the appreciation of US dollars in the week also made the exchange rate to increase on both the banking market and free market.
“However, accumulated from the beginning of the year, the trade balance is still in a surplus of 620 million US dollars. The prospect of increasing Foreign Indirect Investment (FII) from large capital selling deals, the large dong US dollar interest rate difference (1.5-1.7 percent per annum), and the improved foreign exchange reserves are the factors that will support the stability of US dollar/dong exchange rate, which is likely to continue fluctuating around 23,200 dong per US dollar,” forecasted SSI.
