Inter-bank rates jump further
By Hong Phuc - The Saigon Times Daily
HCMC – Inter-bank interest rates picked up sharply last weekend and most transactions centered on short-term loans of one night to two weeks, providing clear evidence that a number of banks are still struggling with liquidity problems.
Inter-bank transactions on Monday were carried out with overnight and one-week lending rates set at 7-7.5%, 7.5-8% for two to three weeks and 8-8.5% for one month, said a research team of the Capital Department at Bank for Investment and Development of Vietnam (BIDV).
Last weekend, inter-bank lending rates ranged from 5.5% to 6.5% for overnight and one-week terms, 6.6-7% for 2-3 week terms and 7.5-8% for one-month terms.
Such interest rates are up sharply against the stable levels seen in all of last week, which were 4.25-5.75% for overnight loans, 5.25-6.75% for one-week loans, 5.75-7.25% for two-week tenors and 6.75-7.75% for one-month terms. Most transactions were for terms of one night, one week and two weeks, and market liquidity was good.
“The inter-bank rate surge is attributed to the central bank’s refinancing commercial banks,” says a report of BIDV.
Meanwhile, a report of Vietnam Capital Securities Co. (VCSC) said the steady rise in inter-bank interest rates could be attributed to less credit as some banks have started paying back refinancing loans and reserving cash for an expected boost in credit in the second half of the year.
The report says Vietnam dong has depreciated by VND30 per U.S. dollar. The exchange rate now stands at VND20,900 to the dollar.
“Nevertheless, the value of the dong has strengthened overall from a four-month low of VND21,036 to VND20,870 as the inter-bank interest rates jump notably, encouraging banks to convert U.S. dollars to dong to lend on the inter-bank market,” says the report.
The demand for foreign currencies rose strongly on Monday, hitting some US$300 million, as businesses wanted to import goods, settle mature debts and repatriate profits home. Meanwhile, enterprises and individuals sold as much as US$350 million.