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Wednesday, June 12, 2024

Interbank interest rates increase four-fold

The Saigon Times

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HCMC – Overnight interbank interest rates on April 6 surged from 0.9% per year to nearly 4.5% per year, leading many experts to predict a further interest rate cut by the State Bank of Vietnam.

After a decrease at the end of March, the interbank interest rate showed signs of increasing immediately after the State Bank of Vietnam (SBV) reduced key interest rates.

The average interbank interest rate for the overnight tenor decreased to 0.9% per year on March 30. The rate increased to 1.12% per year on March 31 and 2.12% per year on April 3.

The rate continued to increase to 2.48% per year on April 4 and 3.41% on April 5.

However, the interbank interest rate for the overnight tenor was still far lower than 6% per annum in February.

In the past two weeks, SBV has lowered key interest rates twice to promote economic growth.

Amidst the lower-than-expected GDP growth in the first quarter, analysts predicted that the SBV might further decrease interest rates for refinancing in the second quarter of this year.

The interbank interest rate is charged on short-term loans made between banks. A high interbank rate suggests a liquidity problem in the banking system and may exert pressure on deposit and lending rates at commercial banks and vice versa.

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