The State Bank today recorded no new issuance of treasury bills, meaning it stopped withdrawing money, for the first time since late September.
The data was just updated by the State Bank this afternoon. Yesterday (November 8), the management agency still attracted 5,000 billion VND through this channel, with three winning bidders, with an interest rate of 1%.
The State Bank has started to withdraw money through treasury bills since the end of September, with the scale as of November 8 being over VND360,000 billion. After the first sessions of net withdrawal at the level of VND10,000-20,000 billion, from the end of October, the volume began to decrease. Since the beginning of November, the scale of treasury bill issuance per session has decreased to below VND10,000 billion.
Previously, in February this year, the State Bank also withdrew money through the treasury bill channel with a total scale of nearly 400,000 billion VND in one month.
The act of pumping and withdrawing money through the treasury bill channel is a normal operation of the State Bank that affects the amount of money in the interbank market (where banks lend to each other), not circulating in the residential market.
According to experts, withdrawing money through treasury bills will cause a large amount of uncirculated money to move from the commercial banking system to the State Bank. This activity does not affect general liquidity or foreign currency supply and demand, but only indirectly affects the exchange rate.
If the State Bank continuously conducts treasury bill auctions, the operator will re-control the interbank interest rate at a stable level (not allowing it to decrease deeply), thereby affecting the VND-USD interest rate gap, indirectly affecting the exchange rate. This can reduce the impact of interest rate trading activities, also known as "carry trade" when the VND-USD interest rate gap remains high at 4-5 percentage points.
The State Bank's decision to stop withdrawing money through the treasury bill channel is somewhat contrary to analysts' forecasts.
In a report earlier this week, the Analysis Department of SSI Securities Company (SSI Research) said that the pressure to issue treasury bills will be higher as this week will record an additional VND65,000 billion of treasury bills maturing, while the interest rate gap between VND and USD remains high.
The increase in VND interest rates in the interbank market will help narrow the gap with USD interest rates, reducing pressure on the exchange rate.
However, overnight interest rates cooled down at the beginning of this week, reaching 1%, down 30 basis points from the previous week. By yesterday's trading session, overnight interest rates had fallen to 0.83%. The spread between overnight VND-USD interest rates remained around 400 basis points.
According to data from the State Bank, as of the end of October, credit increased by 7.1% compared to the end of 2022, up slightly from 6.9% at the end of September. According to SSI Research, the management agency is reviewing to consider increasing the credit growth limit for some banks in need.
The average interest rate of new loans has decreased by about 200-220 basis points compared to the end of 2022, higher than the target reduction of about 150 basis points. Interest rates for existing loans have decreased more slowly due to the lag with deposit interest rates. The average interest rate (combining new and old loans) of some state-owned banks has decreased sharply, such as VCB (5.94% - down 175 basis points compared to the end of 2022) or BIDV (6.46% - down 259 basis points).
Minh Son
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