Banking system liquidity under pressure until Tet ends
Banking system liquidity under pressure until Tet ends
Liquidity of the banking system from now until the end of Tet (Lunar New Year) will remain under high pressure due to rising capital demand.
According to Bao Viet Securities Company (BVSC), the State Bank of Viet Nam last week had to pump a net VND3.786 trillion (US$166.78 million) into the system through open market operations (OMO) channel to support liquidity of the banking system.
The few weeks before Tet are often the peak time for the banking system’s liquidity, when capital demands rise sharply due to seasonal reasons.
BVSC also reported that inter-bank interest rates last week rebounded rather sharply within the range of 0.07-1.2 per cent.
Specifically, the average interest rate for overnight term increased 1.2 per cent to 4.6 per cent per year; 0.3 per cent for one-week term to 4.7 per cent per year and 0.07 per cent for two-week term to 4.8 per cent per year.
The inter-bank interest rate rebounded quickly only after a week of cooling down, proving that the system’s liquidity is still suffering from pressure during the weeks close to Tet.
“We maintain our view that from now until Tet, the system’s liquidity will remain under pressure and at some points certain support will be needed from the central bank,” BVSC analysts said.
They also forecast inter-bank interest rates from now until the end of Tet would continue anchoring at a high level, ranging from 4.5-5 per cent per year.
