According to data from the Vietnam Interbank Market Research Association (Vira), on 11/2, the average interbank VND interest rate sharply decreased by 0.65-4.3 percentage points across all maturities of one month or less compared to the previous session. Specifically, the overnight lending rate, which accounts for most transactions, sharply decreased to 4.2%. Average interest rates for one week to one month maturities ranged from 6.8% to 8.35%. This marks a cooling trend in interbank interest rates in recent sessions, following a spike to 17% last week.
On 11/2, the State Bank of Vietnam (SBV) proactively intervened in the collateralized lending channel. It offered 5 trillion dong for a 14-day term and 3 trillion dong for a 28-day term, both at an interest rate of 4.5% per year. The total successful bid volume reached approximately 7.9 trillion dong, with 5 trillion dong for the 14-day term and about 2.9 trillion dong for the 28-day term. The maturing volume reached nearly 3.7 trillion dong, while the SBV did not offer treasury bills.
Consequently, on the 11/2 trading session, the State Bank of Vietnam net injected over 4.2 trillion dong into the market. The total outstanding volume in the collateralized lending channel was over 480.6 trillion dong, demonstrating the SBV's efforts to manage liquidity.
The interbank interest rate is the rate at which banks lend to each other through the interbank market when they lack reserve funds at the State Bank of Vietnam. Each bank must maintain a mandatory reserve ratio as regulated. The level of this interest rate partly reflects the system's liquidity, thereby indirectly impacting savings and lending rates in the market for individuals and businesses.
In a market strategy report published on 10/2, analysts from SSI Securities Corporation commented that the fluctuations in overnight interest rates in the interbank market over the past half month were "temporary, rather than reflecting systemic risk."
System liquidity has recently been affected by the seasonality of fiscal cash flows, as 31/1 was the deadline for public investment disbursement for fiscal year 2025, leading the State Treasury to accelerate withdrawals. Additionally, the rising gold price attracted speculative capital, contributing to short-term system liquidity stress.
According to SSI, the State Bank of Vietnam "responded promptly and proactively," injecting liquidity through open market operations and providing additional support via foreign exchange (FX) swap operations. As a result, overnight interest rates have cooled down after their unusual rise and are likely to stabilize in the near future.
"Liquidity pressure exists amid credit growth exceeding capital mobilization rates, but this is a cyclical and short-term phenomenon, not reflecting a fundamental change in macroeconomic fundamentals. Currently, interbank interest rate fluctuations should be viewed as a technical factor, instead of a signal of worsening economic conditions," an SSI expert commented.
Quynh Trang
