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SSI: Credit increased sharply

06/06/2022

According to SSI Research, credit increased sharply in the first 5 months of the year, making credit growth at most commercial banks close to the credit limit.

SSI Securities Analysis Division (SSI Research) said that in the weekly money market report from May 30 to June 3 that credit increased sharply in the first five months of the year (8.03% compared to the end of 2021, 16.9% over the same period, according to data from the State Bank of Vietnam), making credit growth at most commercial banks close to the credit limit.

This made it difficult for capital outflows in the past week and eased the pressure on liquidity, SSI commented.

In fact, abundant liquidity during this time is quite important, as it not only helps to keep interbank interest rates down to a low level, but also reduces pressure on deposit interest rates. At the same time, it also helps the exchange rate to be more stable when the State Bank sells USD (to attract VND) to improve the domestic supply of USD.

In the past week, the improved liquidity situation helped the VND interest rate on the interbank market drop sharply.

At the end of the week, overnight term was at 0.5% (down 0.6 pts), the lowest level since April 2021 and 1 week term 1.2% (down 0.32 pts). Longer tenors fell at a lighter rate (from 0.26-0.3 pts), reflecting still-existing interest rate pressure.

In the foreign exchange market, the pressure on the USD/VND exchange rate has somewhat cooled down in the past week. Specifically, on the interbank market, USD/VND fluctuated around VND 23,200/USD while the listed exchange rate at commercial banks was flat, ending the week at VND 23,030-23,340.

The exchange rate on the free market dropped more sharply, when it decreased by more than VND 100/USD and is currently trading at 23,760-23,820, while the difference in domestic - international gold price has narrowed to more than VND 17 million/tael.

In May, the State Bank actively sold foreign currencies to support USD demand from the market. In the long term, the supporting factor for VND continues from the positive supply of USD from the trade balance, FDI disbursement and remittances.

 

Kylie Nguyen

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