Illustrative image (Source: VNA) Hanoi (VNA) - The StateBank of Vietnam (SBV) unexpectedly resumed the issue of central bank billsworth 8 trillion VND (350.9 million USD) this week, a move aimed at increasingthe nation’s foreign exchange reserves.
Before this issue of bills, whose term is one week with interestrate of 1.3 percent per year, the most recent issue the central bank made wason March 3.
According to industry insiders, SBV made the move as commercialbanks did not sell the US dollar to the central bank although they bought alarge quantity of the greenback from individuals and institutions.
The issue will contribute to increasing the interest rate in theinter-bank market, which slipped to an eight-month low last week in the wake ofthe central bank’s recent policy rate cut. The rates for overnight, one-weekand one-month loans declined by 47, 49 and 67 basis points against the previousweek to 1.28, 1.57 and 2.42 percent, respectively, according to a report fromSaigon Securities Incorporation (SSI)’s research division.
The rate hike in the inter-bank market will push up the cost ofholding the dollar, especially in the context that the dollar/dong exchangerate tends to decline, insiders explained. Therefore, the fact that banks areforced to sell the dollar to the SBV is only a matter of time, they said.
To expand the foreign reserves, in the first half of 2017, thecentral bank increased the buying rate for the greenback at its transactioncentre thrice, posting a total increase of 150 VND. The latest hike of 50 VND wasmade on June 19, raising its buying rate for the US dollar from commercialbanks to 22,725 VND per dollar.
Analysts say the buying rate hike at SBV’s centre is aimed atencouraging commercial banks to buy dollars from currency holders at higherrates. The banks will then sell dollars to SBV’s centre, helping the centralbank further build foreign reserves to prepare for any fluctuation that mayoccur if the US Federal Reserve (Fed) increases interest rates.
Early this month, SBV Governor Le Minh Hung said that Vietnam’sforeign exchange reserves was at an all-time high of 42 billion USD. The reserveshave increased by roughly 1 billion USD againstthe end of last year.-VNA
VNA
