Capital cost ebbs to three-month low
|Stacks of 100 U.S. dollar bills are seen at a local bank. The exchange rate has returned to the “high zone” of VND22,700 to the dollar due to the Fed’s possible rate hike in June - PHOTO: UYEN VIEN|
HANOI – The capital cost on the primary monetary market has ebbed to the lowest level in three months, at below 3.6% a year for interbank offers in Vietnam dong of all short tenors.
The rates offered by credit institutions on the interbank market on May 29 shed 20 to 30 basis points for all short terms, from overnight to one-month loans. The week earlier, these rates had already lost 0.4 to 1.2 percentage points.
Specifically, the overnight to one-week rate on May 29 stood at 2.8% a year while two-week, three-week and one-month rates were 3.1%, 3.5% and 3.6% respectively.
Participating banks said market liquidity remained ample, and money supply from major banks was strong. Meanwhile, capital demand of smaller banks showed signs of waning, and focused on short tenors.
The amount of capital supplied by the central State Bank of Vietnam via open market operations also eased, with a net value of VND2,175 billion.
Bankers predicted the demand may rise slightly this week – which is the final week of the month for banks to conform to the compulsory reserve requirement – as banks seek to clean up their financial reports. However, given strong money supply, the interest rate is poised to stay put.
On the primary government bond market, the winning ratios for five- and seven-year terms were high owing to ample liquidity. On the secondary government bond market, the demand also decreased despite net buying by foreign investors.
On the interbank forex market, the U.S. dollar has risen since the weekend. The exchange rate has returned to the “high zone” of VND22,700 to the dollar due to the Fed’s possible rate hike in June. Banks posted the buying price at VND22,735 per dollar over the weekend.
However, the reference exchange rate on May 29 stayed unchanged at VND22,384 to the dollar, translated into the floor price and the ceiling price at VND21,692 and VND23,055, respectively. On the informal market, the rate eased by VND15-20 to VND22,680-22,700.