State Bank withdraws money to reduce excess liquidity and cool down exchange rate

ANTD.VN - After two trading sessions, the State Bank has withdrawn nearly 20,000 billion VND from the banking system through treasury bills to reduce excess liquidity and cool down the exchange rate issue.

According to the results of the treasury bill offering announced by the State Bank, in the session on September 22, this agency continued to offer 28-day treasury bills under the interest rate bidding mechanism.

As a result, 5 members won the bid with a total volume of 10,000 billion VND, interest rate of 0.5%. Previously, in the session on September 21, the State Bank also successfully offered nearly 10,000 billion VND of treasury bills to 2 market members, also with a term of 28 days, interest rate of 0.69%.

Thus, after 6 months of not using this service, the operator has attracted a total of 20,000 billion VND from the banking system after 2 days of restarting this channel.

On the channel of pledging valuable papers, there continue to be no new business arising and the circulation volume remains at 0.

The State Bank's move to withdraw money from the market in the last two sessions took place in the context of continuous excess liquidity in the system.

Việc tiền đồng dư thừa đã khiến tỷ giá leo thang thời gian qua ảnh 1

The surplus of Vietnamese Dong has caused the exchange rate to escalate recently.

Newly released figures from the State Bank show that credit growth is still very slow, reaching only 5.56% as of September 15 (while the target for the whole year is about 14-15%) and only slightly higher than the 5.33% rate at the end of August.

The excess liquidity has caused banks to continuously lower their deposit interest rates. Last weekend and early this week, four state-owned banks, Agribank , VietinBank, Vietcombank, and BIDV, simultaneously reduced their deposit interest rates by 0.2-0.3% per year, bringing the highest deposit interest rate to only 5.5% per year - the lowest in the history of the money market.

Meanwhile, in the interbank market, interest rates remained at very low levels. The average interbank interest rate for the key term of overnight dropped to only 0.14%/year; the 1-week and 2-week terms dropped to 0.33 - 0.40%/year respectively; the 1-month term was 1.03%/year.

The cooling of the VND interest rate while the USD continues to be anchored high has caused the exchange rate to heat up recently. Currently, the USD Index (measuring the strength of the USD against a basket of 6 other major currencies) is standing at nearly 105.6 points, the highest level since early November last year.

Domestically, the central exchange rate was also listed by the State Bank at a record level of 24,060 VND/USD. The reference USD selling price at the State Bank of Vietnam Exchange also climbed to an all-time high of 25,213 VND/USD in the session on September 22.

At the banking system, Vietcombank this morning listed the buying and selling prices of USD at a high level of 24,190 - 24,530 VND/USD.

According to experts, it is reasonable for the State Bank to return to withdrawing money from the banking system, in order to reduce excess liquidity and cool down the exchange rate issue.

According to State Bank Governor Nguyen Thi Hong, in terms of economics , when interest rates decrease, exchange rates naturally increase. Therefore, monetary policy management must be harmonious, and stabilizing the monetary market is the task of the State Bank.

“At a recent meeting, I also said that exchange rate management must be based on the overall economy. An increase in exchange rate is beneficial for export enterprises, but our domestic production depends heavily on imports. The import/GDP ratio is nearly 100%. Thus, when the exchange rate increases, import enterprises will face difficulties. Therefore, this is a difficult problem,” said Governor Nguyen Thi Hong. The head of the State Bank of Vietnam also affirmed that the State Bank of Vietnam is closely monitoring the exchange rate, every day and every hour, to be able to manage appropriately.

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