According to data released by the Vietnam Interbank Market Research Association (VIRA) on June 2, interbank lending rates rose sharply across most short term tenors on June 1.
Checking bank cash transactions (Photo: Manh Quan).
The average overnight rate increased by 4 percentage points from the previous trading session to 11 per cent per year. Rates for two-week and one-month loans also edged up by 0.1 and 0.15 percentage points to 7.5 per cent and 7.75 per cent per year, respectively. The one-week rate remained unchanged at 7.4 per cent.
For US dollar transactions, interbank rates were largely stable. The overnight rate held at 3.65 per cent per year, while one-week and two-week rates stood at 3.7 per cent and 3.75 per cent, respectively. The one-month rate rose slightly by 0.02 percentage points to 3.81 per cent.
Amid the increase in borrowing costs, the State Bank of Vietnam stepped up liquidity support through open market operations (OMO). On June 1, the central bank offered VND 46 trillion (approximately USD 1.77 billion) through collateralized lending facilities, including VND 20 trillion (approximately USD 769 million) for seven days, VND 12 trillion (approximately USD 462 million) for 35 days, and VND 14 trillion (approximately USD 538 million) for 56 days. All carried an interest rate of 4.5 per cent per year.
The OMO channel is a key monetary policy tool through which the central bank buys and sells securities with commercial banks to regulate liquidity and short term interest rates.
The June 1 auction saw VND 15.218 trillion (approximately USD 585 million) allotted for seven-day loans, VND 8.597 trillion (approximately USD 331 million) for 35-day loans, and VND 11.188 trillion (approximately USD 430 million) for 56-day loans. Securities worth VND 21.383 trillion (approximately USD 822 million) matured during the session, while no treasury bills were offered.
As a result, the State Bank injected a net VND 13.62 trillion (approximately USD 524 million) into the banking system through open market operations. Outstanding balances on the collateralized lending channel currently stand at VND 345.931 trillion (approximately USD 13.3 billion).
The move followed the central bank's strongest weekly liquidity injection in more than a month, with a net VND 30.733 trillion (approximately USD 1.18 billion) pumped into the market. The action came as interbank rates continued to rise while policymakers sought to maintain a stable interest rate environment to support economic growth.
According to securities analysts, the State Bank's liquidity support could place upward pressure on medium term interest rates, as deposit growth continues to lag behind credit expansion. However, deposit rates are expected to remain relatively stable in the near term after regulators instructed commercial banks to continue lowering lending rates.
Analysts at Rong Viet Securities said liquidity pressures may ease in the second half of the year if public investment disbursement accelerates, which would be a key indicator that funding cost pressures on banks are beginning to subside.
