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Thursday, June 13, 2024

Banks on edge

By Trieu Minh

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Around this time last year, the cash flow was obstructed, and a widespread liquidity crunch was reported across the board, driving up interest rates, with many banks hiking deposit rates to maintain liquidity. Now, the situation has all moved inversely. Ample liquidity The overnight rate on the interbank market on November 16, 2023 tumbled to 0.21% a year, while the rates for one-week and two-week lending also crashed to 0.33% and 0.52%, respectively. Compared to early this month, the overnight rate lost 84 basis points, while the one-week and two-week rates shed 116 basis points. One year ago, the overnight rate hovered around 4-5%, or even 6-7% at times. The G-bond coupon in recent auctions ranged from 2.5% to 3.3% a year for 10-year debts compared to 4.8% one year earlier. Despite the low coupon, investors still snapped up some 90% of all bonds on offer. Even for the 30-year bonds, the winning coupon was also depressively low, at 3.05% a year, with VND750 billion worth of G-bonds issued. Such comparisons indicate that the liquidity systemwide was excessively ample. Around this time last year, the cash flow was obstructed, and a widespread liquidity crunch was reported across the board, pushing […]
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