SSI: lending interest rates are expected to decrease by 0.5 - 1% thanks to the interest rate support package of VND 40,000 billion
According to SSI Securities Analysis Division (SSI Research) in its recent money market report, the focus of the financial-banking market last week was the discussion of the Governor of the State Bank of Vietnam with delegates during the National Assembly session in May 2022.
In particular, on interest rates, the goal of the Government, the National Assembly and the State Bank of Vietnam in the two years 2022 - 2023 is to lower the lending interest rate level to support businesses in the recovery period after COVID-19. However, the current context (unfavorable inflation and exchange rates) puts the SBV's operating objectives under more pressure.
In fact, credit increased by 8% compared to the end of 2021 as of the end of May 2022 while the lending interest rate only increased by 0.09 percentage points compared to the end of the year, which is a great effort from the banking industry.
In the near future, the SBV will implement an interest rate support package worth VND 40,000 billion to most industries (except for high-risk industries) and the analysis team expects lending interest rates to decrease by 0.5 - 1% in two years 2022-2023.
In the past week, the liquidity status improved, helping the VND interest rate in the interbank market to remain low throughout the week. At the end of the week, the overnight interest rate was at 0.53% (increased by 0.29 pts), and 1 week term was at 1.2% (increased by 0.19 pts).
In the foreign exchange market, the movement of VND often lags behind other currencies, therefore the movement of VND was mostly flat last week.
Specifically, on the interbank market, USD/VND decreased by 0.1% while the listed exchange rate at commercial banks decreased by 40 dong, ending the week at VND 22,990-23,300. The exchange rate on the free market is flat, and is currently trading at 23,770-23,800.
Experts believe that the downward pressure on VND's price is still relatively clear in the context of the USD appreciation, as shown by the fact that USD/VND rebounded in the first session of this week (increased by 0.13%). The State Bank has continuously actively implemented the sale of foreign currencies to support the demand for USD from the market, through a contract to sell USD for a term of 3 months.
In the long term, the supporting factor for VND continues from the positive supply of USD from the trade balance, FDI disbursement and remittances.
The Governor of the State Bank has recognized and advocated for public consultation to select many other brands to produce gold bars. In fact, after the above announcements, the price difference between SJC and international gold has decreased to only VND 15 million /tael.
- SSI: lending interest rates are expected to decrease by 0.5 - 1% thanks to the interest rate support package of VND 40,000 billion
- MBS: Inflation is predicted to remain low, monetary policy tightening is not yet needed
- Deposit interest rates are under increasing pressure, SBV wants to reduce lending rates to help businesses recover
- As of May 31, credit growth reached 8.04%
- SSI: Credit increased sharply
- Vietnam is in the group of 10 countries with the largest amount of remittances in 2021
- SSI: Deposit interest rates have increased by 0.3-0.5 percentage points compared to the end of 2021
- VNDirect: Monetary tightening will only take place in the second half of 2022
- About VND 705,000 billion of credit was "poured" into the economy over four months
- Ho Chi Minh City: Credit surged