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Banking system liquidity is still abundant

25/08/2020

The State Bank of Vietnam continued to not intervene in the open market in the past week when the liquidity of the banking system remained abundant.

According to data from Bao Viet Securities (BVSC), in the past week (August 17 - August 21), the State Bank continued not to pump/suck net on open market. T-bills and outstanding amount on OMO have remained at 0 from the end of June to the present.

BVSC believes that, in the upcoming period, the State Bank may continue not to intervene in the open market thanks to the abundant liquidity in the system.

On the other hand, the interbank interest rates last week increased slightly for overnight, 1-week and 2-week terms, at 0.01 percentage point; 0.08 percentage points and 0.04 percentage point respectively, bringing interest rates for these terms to 0.19% per annum; 0.32% and 0.34% per annum.

"Interbank interest rates continue to remain at a low level, showing that the liquidity of the banking system is still abundant", said BVSC.

On the foreign exchange market, the central rate of the week decreased slightly by 2 dongs to VND 23,210/1 USD. The exchange rate at commercial banks also decreased slightly by 10 dongs, down to VND 23,166/1 USD.

According to BVSC, the exchange rate continued to be stable in recent weeks when the US Dollar Index (DXY) weakened and the supply of foreign currency was abundant. Specifically, in the first seven months of the year, Vietnam has a trade surplus of USD 8.4 billion while the total newly registered capital and foreign investors contributing capital for buying shares also reached USD 10.12 billion.

However, it is worth noting that although Vietnam is having a trade surplus, both the scale of exports and imports have decreased sharply due to the negative impact of the COVID-19 pandemic. The sharp decline in imports is a relatively negative signal because it reflects the pessimistic sentiment of the business community, leading to a decline in private investment, which in turn can affect growth prospects in the future. In addition, the source of remittances is also forecast to decrease this year due to the negative impact of the pandemic.

 

Kylie Nguyen

© 2019 Vietnam Bank for Agriculture and Rural Development No. 2 Lang Ha street, Ba Dinh district, Hanoi, Vietnam
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