Vietnam's overnight interbank interest rate has declined to 2.5 per cent a year, its lowest level since the beginning of the year, while the State Bank of Vietnam (SBV) has continued to absorb excess liquidity for a third consecutive week.
Interbank rates fell to 2.5 per cent a year (Photo: Vira).
According to data from the Vietnam Interbank Market Research Association (Vira), the overnight interbank rate closed at 2.5 per cent at the end of last week.
The two-week interbank rate stood at 5.6 per cent, while the one-month rate rose slightly to 7.3 per cent, compared with the beginning of the week.
Interbank borrowing costs have eased significantly after surging to 11 per cent in early June.
During that period, the SBV introduced measures to improve banking system liquidity, including adjustments to regulations governing the use of short-term funding for medium- and long-term lending, as well as changes to the calculation of the loan-to-deposit ratio (LDR).
According to official data, between July 20 and July 25, the central bank recorded four consecutive sessions of net liquidity withdrawals through open market operations, followed by a modest net injection at the end of the week.
Overall, the SBV absorbed VND 26.35 trillion (about USD 1.01 billion) on a net basis during the week, marking its third consecutive week of net liquidity withdrawals.
The central bank provided nearly VND 14 trillion (about USD 537 million) in loans through repurchase agreements backed by eligible securities at an annual interest rate of 4.5 per cent, while VND 40.29 trillion (about USD 1.55 billion) worth of such loans matured during the same period.
Outstanding repurchase agreements fell to more than VND 160.20 trillion (about USD 6.16 billion), while no transactions were conducted through the SBV's treasury bill operations.
Despite the decline in overnight rates, borrowing costs for maturities ranging from two weeks to one month continued to edge higher, suggesting that banks remain cautious about future liquidity conditions.
Analysts said monetary policy could face increasing pressure as credit growth continues to outpace deposit growth, while persistent geopolitical tensions in the Middle East add further uncertainty to financial markets.
