Besides, the VND/USD exchange rate shows signs of cooling down strongly, even the USD price on the free market is forecasted to be lower than listed in commercial banks.
In the first week following Tet holiday, the State Bank net withdrew VND 15,000 billion
After 5 consecutive sessions of net injection of liquidity to the banking system following the Lunar New Year holiday, the State Bank of Vietnam (SBV) withdrew once more in the last session of the week (February 3).
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VND mobilizing interest rates are below 10%/year for 6-month terms across the system |
In general, the monetary authority has net withdrawn 12,592 billion dong from the banking system in the session 3/2. Previously, the operator has continuously pumped liquidity in 5 trading sessions following the Tet holiday with a total net supply volume of nearly 70,800 billion dong.
The reversal of the SBV’s management took place following the Fed (US Federal Reserve) announced to raise the basic interest rate by 0.25 percentage points, as expected by the market. The Fed has raised interest rates eight times in a row since March 2022. Currently, the standard interest rate in the US is in the range of 4.5-4.75%. This is the highest level since October 2007. On the other hand, interbank interest rates remained high despite the SBV’s continuous support for system liquidity.
According to updated data as of February 2, the average overnight interbank VND interest rate (main term accounted for over 95% of the transaction volume) was at 6.26%/year, an increase of 0.17 points. % compared to the level recorded before the Tet holiday and regarding 1.7 percentage points higher than the end of 2022.
On the interbank market, interest rates for longer terms such as 1 week, 2 weeks, 1 month, 3 months fluctuated. While the interest rate for 9-month term suddenly increased to 13%/year from 9.61% recorded previously. However, the transaction turnover at this term was only at 200 billion, accounting for less than 0.1% of the interbank transaction size in the 2/2 session.
2023 forecast: interest rates, exchange rates will drop sharply
On the first day of Tet, the money market changed unexpectedly when the VN/USD exchange rate for the first time cooled down sharply, reducing the free market to even lower than listed commercial banks.
According to a recent analysis report, Bao Viet Securities Company (BVSC) said that compared to the end of December 2022, by the end of January 2023, the VND has increased by 0.75% once morest the USD. . The high interest rates and the cooling of the DXY (Dola Index) are the factors that are supporting the appreciation of the VND.
Not only VND but also all currencies in emerging countries in Asia (according to the tracking form of BVSC) share the same price movement compared to the end of 2022. In which, the Thai Baht is the currency that has the same performance. The highest price increaser was 4.76%. The fact that VND still appreciates in the context of the SBV’s move to buy USD once more (according to some sources) shows that the exchange rate pressure from the outside is easing. Combined with the control of CPI in the coming months to below the target threshold of 4.5%, this will be the basis for further lowering the interest rate level and gradually loosening monetary policy to support economic growth. chief.
In the residential deposit market, deposit interest rates were almost flat in January, showing signs of cooling down from the end of the month. With the pressure to support the exchange rate easing, BVSC believes that the pressure to raise interest rates will no longer be in 2023. Instead, monetary policy this year is likely to shift to a supportive direction for growth. BVSC expects interest rates to fall once more in 2023, with clearer signs from Q2, when the Fed stopped raising interest rates and Vietnam’s inflation cooled down.
According to the SBV, credit growth target for the whole year 2023 will be at 14-15%. BVSC believes that with high interest rates, difficult real estate sector and less positive economic outlook, credit growth for the whole year 2023 will be only regarding 13%.
Judging from the assumption that the target interest rate that the Fed is aiming for may fluctuate around 5% in 2023, VCBS believes that in order to ensure macroeconomic balances, the interbank interest rate level is likely to continue to continue. significantly higher than last year, the average high probability is anchored around 7% for 1 to 3 month tenors.
Theo Tien Phong