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SSI: Deposit rates will continue to move sideways in the next few months

29/11/2020

According to SSI, the liquidity of commercial banks is still very abundant, at the same time, it is forecast that deposit interest rates will continue to go sideways in the next few months.

The report on the money-bond market for week from November 23 – November 27 has just been announced by SSI Securities Company showed that in the past week, the open market has no new transactions. The interest rates on the interbank market increased by 0.03-0.04 percentage point, closing the week at 0.2 per cent per annum for the overnight term and 0.25 per cent per annum for the 1-week term.

Meanwhile, in the market of economic entities and individuals, a number of large commercial banks have adjusted down by 0.2 percentage points for interest rates of term deposits of less than 12 months. Private commercial banks almost kept the deposit interest rates, popular at 2.5-3.8 per cent per annum for terms of less than 6 months, 3.7-5 per cent per annum for terms of 6 to less than 12 months, 4.9-5.8 per cent per annum for 12 and 13 month terms.

According to information from the State Bank, as of November 17, 2020, the total outstanding loans to the economy was more than VND 8.79 million billion, an increase of 7.26 percent compared to the end of 2019, much lower than the 10.28% for the same period in 2019.

In such a context, SSI believes that the liquidity of commercial banks is still very abundant, and at the same time, deposit interest rates will continue to move sideways in the next few months.

Low interest rate expectations have led to a sharp increase in the demand for investment in government bonds. Last week, the State Treasury called for 10 trillion dong of bonds in 4 terms of 5, 10, 15 and 30 years. Both the registration rate and the winning bid rate calculated on the number of calls for bids increased sharply compared to the previous week, 311% and 91.4% respectively.Winning rates also dropped quite sharply (0.07-0.09 percentage points) in 2 favorite terms of 10 and 15 years, but all the bid calls were still issued.

On the foreign exchange market, last week, the State Bank reduced the buying rate by  VND 50/USD, to VND 23,125/USD after a year of staying unchanged. This caused the exchange rates of commercial banks to also drop sharply in the following days.

However, SSI emphasized that the buying rate of commercial banks is still lower than the buying rate of the State Bank and the bid-ask difference remains very wide (VND 210/USD).

 

Kylie Nguyen

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