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Tuesday, June 18, 2024

The liquidity gap

By Trieu Minh

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The central bank’s seven-day bank bill buybacks and its additional issues of 28-day bills indicate a clear divergence in the current liquidity landscape among banks. While some banks have ample liquidity to continue buying bills issued by the central bank, others have resorted to short-term borrowings from the central bank. Resumption of net injection On April 15, the State Bank of Vietnam (SBV), the central bank, resumed purchasing nearly VND12 trillion worth of seven-day bills. All eight participating members won deals selling bills at a coupon rate of 4%. This marks the second consecutive session in which the SBV has bought back bonds. Prior to this, on April 12, the central bank bought back VND10 trillion of bills from two banks, also at a 4% coupon. Thus, within just two sessions, a total of VND22 trillion has been injected into the banking system through the buyback channel. On April 2 and 3, the SBV’s buybacks of seven-day bills totaled VND5.95 trillion and VND2.513 trillion, respectively. The injection of cash into the system through the buybacks of valuable papers has become frequent and it seems to be a support policy for credit institutions in liquidity constraints. Meanwhile, the SBV continues to […]
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