Overnight interbank interest rate hits 16-month low thanks to abundant liquidity

Overnight interbank interest rate hits 16-month low thanks to abundant liquidity

According to data from the US Federal Reserve’s New York branch, the gap between the US secured overnight financing rate (SOFR) and the Việt Nam’s overnight interest rate on June 18 was 2.28 percentage points.

Deposit and lending interest rates listed at commercial banks have also continually decreased. Photo vietnambiz.vn

Overnight interbank interest rates have dropped to 1.67 per cent per year, the lowest level since March 2024, thanks to abundant liquidity.

According to the State Bank of Vietnam (SBV), in the interbank market, the trend of decreasing overnight interest rates has continued, starting at 3.13 per cent in the first session of last week and gradually decreasing over the sessions to 1.67 per cent at the last session of the week. In total, overnight interest rates decreased by 1.46 percentage points within one week.

Interest rates for terms from one week to three months have also decreased, ranging from 2.2 per cent to 5.03 per cent.

According to data from the US Federal Reserve’s New York branch, the gap between the US secured overnight financing rate (SOFR) and the Việt Nam’s overnight interest rate on June 18 was 2.28 percentage points.

Experts at Vietcap Securities Company predict that interbank interest rates will remain low this month, thanks to abundant liquidity from a large amount that the State Treasury of Vietnam is depositing at domestic commercial banks.

In addition, according to the Government's orientation of low interest rates to support economic growth, commercial banks are likely to continue to maintain low interest rates in the short term, the experts said.

Deposit and lending interest rates listed at commercial banks have also continually decreased.

As of the end of May 2025, the average 12-month term deposit interest rate of the group of private joint-stock commercial banks has decreased by 12 basis points compared to the beginning of the year, to 4.93 per cent per year; while the rate of the group of commercial banks with State-owned capital has remained at 4.7 per cent per year.

As for loan interest rate, in a recent report sent to the National Assembly, the SBV said that as of mid-April 2025, the average lending interest rate for new loans of the commercial banking sector was about 6.34 per cent per year, down 0.6 percentage points compared to the end of 2024. This was a record low in many years, even lower than that in the COVID-19 pandemic period. According to statistics of the financial data provider Finpro, during the COVID-19 pandemic period from 2020 to 2022, the lowest average quarterly lending interest rate was 7.9 per cent per year, seen in the first quarter of 2022.

However, according to the SBV, interest rates in the coming time will face many pressures to rise. The SBV explains that the lending interest rate has decreased sharply in recent times, making room for further cuts limited. At the same time, credit demand for production, business and consumption is forecast to increase sharply to meet the economic growth target in 2025, while bank capital raising may face difficulties due to competition from other attractive investment channels.

Forecasting about the interest rate trend in the second half of 2025, Dr. Nguyễn Hữu Huân, a lecturer at HCM City University of Economics, said that if the SBV continues to significantly pump money into the banking system, interest rates will remain low.

However, Huân notes, everything has two sides. He explains that if interest rates are kept low in the current context, the pressure on the USD/VNĐ exchange rate will be very large. Although the strength of the US dollar is showing a weakening trend, the Vietnamese đồng continues to depreciate against the dollar, which means a double weakening situation.

The SBV said that it will continue to closely follow market developments and the domestic and international economic situation to proactively, flexibly, promptly and effectively manage monetary policy. At the same time, monetary policy will be coordinated synchronously, harmoniously and closely with fiscal policy as well as other macro policies, aiming to achieve the priority goal of promoting strong economic growth associated with maintaining macroeconomic stability, controlling inflation and ensuring major balances of the economy. 

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