The headquarters of the State Bank of Vietnam (SBV). (Photo: sbv.gov.vn) On November 9, 20 trillion VND (820.2 million) of bills came to maturity, butthe SBV did not issue new bills for the first time after seven consecutiveweeks of using the channel. It meant a corresponding amount of money was pumpedback into the banking system.
On the day, though the SBV continued to offer to buy valuable papers with aseven-day term, no banks participated in the auction.
Previously, in the context of a liquidity surplus in the banking system and thelowest interest rate in the interbank market since the beginning of 2021, theSBV reopened the bill channel to withdraw cash out of the banking system onSeptember 21 after more than six months of ceasing the channel.
According to analysts, the SBV's bill issue move was aimed to adjust liquidityin the banking system in the short term, which is expected to push upVietnamese dong-denominated interest rates in the interbank market with anaim to reduce the interest rate gap between the US dollar and the dong to indirectly support the foreignexchange rate.
The SBV’s statistics showed from September 21 to November 8, 2023, the SBVissued a total of nearly 360.35 trillion VND in bills, with a term of 28 days.By November 9, 2023, bills worth 185.69 trillion VND came to maturity so thecash returned to the banking system. Bills worth 174.65 trillion VND are undercirculation and will mature in the near future.
The SBV ceased bill issue in the context that interbank interest rates haverebounded from the lowest level.
According to the SBV’s data, the average overnight interbank interest rate of dong-denominated deposits on November 8 was0.83% per year, a sharp increase compared to the 0.14% interest rate applied onSeptember 21 when the SBV reopened the bill issue channel to withdraw cash outof the banking system. The interest rates for one-, two- weeks, and one monthalso increased by 0.3-1 percentage point.
In addition to the increasing trend of interbank interest rates,the US Federal Reserve (Fed)'s decision to keep interest rates unchanged in thelast November meeting caused the value of the greenback in the internationalmarket to reverse and decrease sharply, which helped reduce pressure on thedomestic foreign exchange rate.
In fact, the USD/VND exchange rate has also decreased continuously in recent days.On November 9, 2023, the greenback selling price at Vietcombank - the bank withthe largest foreign currency transaction scale in the banking system - waslisted at 24,250 VND per dollar, down 0.9% against the previous week./.
VNA
