Topic: Interbank interest rates

In the week from September 5-9, the interbank interest rate spiked to 7.5 per cent per annum at one point, the highest level since 2012, but then fell to 4.29 per cent thanks to regulating activities by the State Bank of Vietnam, helping to gradually stabilize system liquidity.

The USD/VND exchange rate quickly cooled last week after flexible regulatory moves from the State Bank of Vietnam. Interbank interest rates, meanwhile, skyrocketed over the last week. In just one and a half months, the interbank overnight lending rate has increased more than ten times and the one-week term lending rate more than five times.

Interbank interest rates have continued to increase despite the State Bank of Vietnam’s net injection of capital. This appears to put a strain on liquidity in the banking system. In early August, VND85 trillion ($3.64 billion) of bills will mature, which will help system liquidity regain some balance.