According to VCBS, although there is no shortage of interbank liquidity, interest rates will remain at a higher level than in the previous period and are unlikely to decrease in June.

In the newly released update report, Vietcombank Securities (VCBS) assessed that interbank interest rates continuously inched up in May and showed no sign of stopping increasing when the liquidity was no longer excessive.

At the end of the month, interest rates for overnight, 1-week, 2-week, 1-month and 3-month terms were recorded at 1.083%; 1.183%; 1.237%; 1.307% and 1.433% respectively.

According to VCBS, liquidity in this period is not too abundant when new resources are expected to appear on the market only from July after the foreign currency purchase contracts of the State Bank are due. Along with that, concerns around inflation expectations made the policy maker give priority to the goal of stabilizing inflation.

Moreover, in the context of concerns about complicated developments of the pandemic, banks will need to evaluate more carefully with new disbursements, and at the same time, the possibility that bad debts may increase again.

The bright spot at this time continued to come from the fact that the capital flow continued to choose Vietnam as an investment destination with the number of registered FDI and disbursed FDI increased by 14% and 7% respectively over the same period.

Therefore, with these factors, although there is no shortage of interbank liquidity, the interest rate level will remain at a higher level than the previous period and are unlikely to decrease in June, according to VCBS.

Kylie Nguyen