Overnight interbank rate hits nine-month record high
Overnight interest rate in the interbank market has surged to more than 4%, the highest level in the past nine months, data from the State Bank of Vietnam showed.
A bank teller counts cash at a transaction office in Hanoi. (Photo: cafef.vn)
Hanoi (VNS/VNA) - Overnight interest rate in theinterbank market has surged to more than 4%, the highest level in the past ninemonths, data from the State Bank of Vietnam showed.
The rate on February 21 had increased by nearly 4 times against theend of last week, from 2.15% to 4.14%. It meant after just one trading session,the rate nearly doubled and reached its highest level since the end of May2023. It was much higher than the peak level of 2.38% recorded during the peakpayment period near the Lunar New Year.
With the surge, the rate for overnight term is currently evenhigher than that of one-week to three-month terms.
In the interbank market, overnight term accounts for up to 90% oftotal transaction value.
Along with the overnight term, interest rates at two other keyterms also increased sharply compared to the end of last week, of whichone-week term was up from 1.27% to 3.81%; two-week term was up from 1.39% to3.02%; and one-month term was up from 1.85% to 2.55%.
According to experts, the sharp surge of the overnight rate, alongwith high transaction turnover, meant liquidity of the banking system isshowing signs of shortage, but it is only in the short term and it will likelycool down soon in the coming trading sessions.
Interbank interest rates have increased significantly after creditgrowth unexpectedly accelerated in the last month of 2023. In December 2023alone, credit of the banking system surged by up to 4.35% compared to theprevious month, bringing credit of the whole year to 13.5%.
Experts expect the sharp increase in overnight interbank interestrates will contribute to reducing pressure on domestic exchange rates when theUS dollar has strongly recovered in the international market. The greenback priceis currently listed at 24,390 VND per dollar for buying and 24,790 VND perdollar for selling, an increase of 190 VND compared to before the Lunar NewYear holiday.
In a newly released report, analysts from the VietcombankSecurities Company (VCBS) forecast the Vietnamese dong may still devalue against the dollar wheninterest rates continue to break deep into the bottom zone.
The development of the exchange rate will depend largely onforeign currency supply from direct and indirect investment cash flows, andremittances, VCBS analysts noted./.
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A bank teller counts cash at a transaction office in Hanoi. (Photo: cafef.vn) 
