Macro Report

Macro Report
Vietnam Macro Weekly_20221205

SBV signals to grant credit growth extension. Last week, liquidity in the system returned to normal levels, and open market operations were not as active as before. During the week, the SBV regularly utilized reverse repos in timing with expiration volume. There were VND 45.66 tn of 14-day reverse repos at 6% p.a newly issued, out of VND 43.6 tn being expired. No SBV treasury bill issuance was recorded, and outstanding bills remained at VND 40 tn.  In total, the SBV has net injected VND 2.1 tn. VND overnight interbank rate was trending down, was at 5.4% (-60 bps) as of last Friday. On the other hand, longer rates (term over 2 weeks) jumped significantly (+40-50 bps) to reflect the likelihood of upcoming Fed rate hikes in mid-Dec. 

05/12/2022

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Vietnam Macro Weekly_20221128

Overnight interbank rate moved higher. Last week, only reverse repo activities have been utilized. There were VND 29.4 tn of 14-day reverse repos newly issued, out of VND 23 tn that had gone expired. No SBV-bill issuance was recorded, and outstanding bills remained at VND 40 tn.  In total, the SBV has net injected VND 6.38 tn. The VND overnight interbank rate moved higher, at 5.9% (+50 bps) as of last Friday.

28/11/2022

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Vietnam Macro Weekly_20221121

SBV Bill issuance shifted to rate bids. This week, the SBV has returned to significantly withdraw money out of the system via OMO operations, with the aim to boost VND interbank rates. A large volume of reverse repos came to expire this week (VND 58 tn), but the SBV only issued VND 43.6 tn to pair with, at 6% with a term duration of 14 days. More interestingly, SBV treasury bill issuance has been reactivated after being idle for almost 2 weeks, with a total of VND 40 tn. Term duration has been lengthened to 28 days from 7 days as seen previously, in order to maintain systemic liquidity in a more flexible manner. Further, bidding mechanism shifted back to the rate bids and winning rate dropped from 6% to 4.5% pa, as of Friday. In total, the SBV has net withdrew VND 54.6 tn out of the system. The move is intended to boost VND interbank rates, and maintain a reasonable spread with the USD rate ahead to lower pressure on the exchange rate, as the Fed is expected to hike rates by at least 50 bps in mid-December. As a result, closing the week, overnight interbank rate moved higher, to 5.5% (+80 bps WoW). 

21/11/2022

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Vietnam Macro Weekly_20221114

Overnight interbank rate dropped significantly. Liquidity in the banking system improved slightly last week. Only VND 28 tn (-60.4% WoW) of 14-day reverse repos were newly issued, and the bidding mechanism remained at volume bids at a fixed rate of 6% p.a. On the other hand, there were no SBV treasury bills being issued throughout the week, and there was no outstanding SBV treasury bills left. In total, the SBV has net withdrew VND 25.6 tn over the last the week, mainly due to large number of reverse repos coming due for expiration (VND 48.7 tn). VND overnight interbank rates during the week dropped to under 5%, and was at 4.4% (-160 bps) as of last Friday. Yet it might create a bit pressure for the exchange rate, as the spread between USD and VND interbank rates narrowed.

14/11/2022

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Monthly Fixed Income Report – October 2022: Exchange rate under pressure

Liquidity continued to be a focal point in October. The SBV actively used OMO activities to help clear short-term congestion after the SCB was converted into special control status.

The overnight VND interbank rate moved wildly within October. Daily trading turnover dropped due to low supply and interbank lending reluctancy between banks.

The SBV announced another policy rate hike, mainly to deal with the weakness of the local currency.

Broad-based increases by 30-100 bps in deposit rate quotations at banks after the policy rate hike, for both individuals and corporations. The lending rate increase continued an incline pattern, though at a slower pace.

The VND notably underwent depreciation in October. The SBV revised its ask-price three times in October, and widened the trading band for the first time since 2015. FX intervention from FX reserves were limited.

Disbursed FDI has shown to be robust, implying a firm degree of forward-facing confidence for Vietnam’s continued role as a prime manufacturing hub, while helping to shore up the VND. 

Trading volume was improved significantly in the primary market. Winning yields ticked up, whereas the spread between the primary and secondary market narrowed.

Bond yields in the secondary market continued an uptrend trajectory in October. Daily average turnover dropped, due to low supply and tight liquidity conditions.

10/11/2022

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Vietnam Macro Weekly_20221107

Liquidity returned to stay stretch. There was more stress observed in terms of liquidity in the banking system this week, and reverse repos were utilized with a longer term duration. Around VND 58.1 tn of 14-day reverse repos were issued, and the bidding mechanism remained at volume bids at a fixed rate of 6%. There were also VND 20 tn of 7-day SBV-bills issued earlier on during the week. In total, the SBV has net injected VND 74 tn for the week. VND overnight interbank rates during the week stayed at a range above 6%, having increased to 6.2% p.a by the close of the week (+140 bps). The spread between USD and VND interbank rates remained stable, at over 200 bps.

07/11/2022

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Vietnam Macro Weekly_20221031

SBV hiked policy rates. Liquidity in the banking system has improved during the week, and open market operations were utilized with the flexible combination of SBV bill and reverse repos. Around VND 73.1 tn (-42% WoW) of 7-day SBV-bills were issued, and the bidding mechanism remained at volume bids at a fixed rate of 6% (up from 5% last week), which mainly aimed to boost interbank rates. There were also about VND 37 tn of 7-day reverse repos newly issued at 6%.   For the week, the SBV has net injected VND 46.6 tn worth, due to a large amount of SBV-bill expirations (VND 126.2 tn).

31/10/2022

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Vietnam Macro Weekly_20221024

SBV aggressively withdrew liquidity out of the system. A week after the government had taken custody of SCB into special control, liquidity in the banking system quickly calmed. Since then, the SBV has aggressively withdrawn liquidity out of the system via SBV-bill issuance. Around VND 126.1 tn of 7-day SBV-bills were issued. Interestingly, the bidding mechanism in particular shifted to volume bids instead of the rate auction method as was done previously, and the SBV has fixed a winning rate at 5%, which mainly aimed to raise interbank rates. However, interbank rates still stayed at a low level of around 4% p.a. as of last Friday.

24/10/2022

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Vietnam Macro Weekly_20221017

Reverse repos have been actively utilized. There has been a surge in withdrawals from Saigon Commercial Bank (SCB) over the week, and again the SBV stepped in with reverse repo issuance to provide temporary liquidity for the system. Around VND 89.4 tn of reverse repos were issued during the course of a week, at longer terms spanning 7 to 28 days. The bidding mechanism in particular had come back to volume bids (instead of the rate auction method as was done previously), and the SBV has fixed a winning rate of 5%. So far within 2 weeks of October, the SBV pumped approx. VND 131 tn from OMO activities into the system. As a result, interbank rates have cooled down from a peak of 8.4% p.a last week to 5.3% as of last Friday. 

17/10/2022

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Monthly Fixed Income Report – September 2022: An official confirmation of the monetary policy normalization

Liquidity continued to be a focal point in September. The SBV actively used OMO activities to help set the tone for interbank rates during the month. Rates trailed higher overall to reflect the recent pivot towards a tightening monetary policy.

The SBV announced the first policy rate hike since 2011, following at the heels of other regional central banks to lessen the weakness of the local currency, in a bid to tame inflationary pressure.

Broad-based increases by 30-100 bps in deposit rate quotations at banks after the policy rate hike, for both individuals and corporations. Lending rate increase was at a slower pace.

Credit growth reached 16.9% YoY, slightly up from 16.2% in August. Credit growth conditions eased during the month, as credit extensions were granted by the SBV to domestic banks in early September.

The VND notably underwent depreciation in September. The SBV revised its ask-price twice in Sept, and FX intervention from FX reserves were limited.

Trading volume dropped in the primary market, as asking yields were up significantly to reflect conditions in the secondary market.

Bond yields in the secondary market were up significantly during September, and the primary market spread widened.

11/10/2022

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Vietnam Macro Weekly_20221010

Significant jump in interbank rates. Last week, the market saw significant jumps in interbank rates due to sudden shortage from VND-denominated liquidity. The overnight interbank rate soared to over 8% on Wednesday and Thursday. At some points during the week, the ask-rate quoted by banks even jumped to over 10% p.a., which seemingly created a degree of panic sentiment, and resulted in spillover effects across other banks. The SBV again applied its available toolbox and utilized the reverse repo facility to support liquidity, amounting to VND 41.7 tn for the week at an average winning rate of 6.5% p.a. (from 5.9% as seen during the last week). Closing the week, overnight rates calmed down to around 6.8% p.a.

10/10/2022

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Vietnam Macro Weekly_20221003
Pressure on the exchange rate remained high. Last week, the SBV maintained tight liquidity conditions and kept VND interbank rates hovering at a reasonable level (5% – 5.5%) vis a vis the USD. SBV bill issuance was regularly utilized, with a total of VND 45.4 tn at 5% (+50 bps higher than the previous rate) and at a longer term (14 days vs 7 days). On the other hand, 7-day daily reverse repo volume has also come to an average of VND 1 tn per day, with the winning rate gradually ticking up to 5.9% (+40 bps) on Friday. For the week, VND 28.1 tn has been injected into the system via OMO activities (mostly from SBV treasury bill expiration), but around VND 35 tn was withdrawn via FX sales. Closing the week, the overnight interbank rate was at 5.16% (+23 bps WoW).

03/10/2022

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Vietnam Macro Weekly_20220926

SBV officially hiked policy rates. Last week, the SBV maintained tight liquidity and kept interbank rates hovering at a reasonable level to prepare in advance for the Fed rate hike. SBV-bill issuance was regularly utilized, with a total of VND 73.8 tn in 7-day T-bills at 4.5% (+50 bps higher than the previous rate). On the other hand, 7-day daily reverse repo volume has also applied at an average of VND 1 tn per day, with the winning rate gradually ticking up to 5.5% (+90 bps) on Friday. Overall, VND 34.6 tn has been withdrawn out of the system via OMO activities, and around VND 23 tn via FX sales. Closing the week, the overnight interbank rate was at 4.9% (+37 bps WoW). Given further expected aggressive actions from the Fed, we believe that the SBV might opt to maintain its tight liquidity status to year-end, and the VND interbank rate might reach 5-5.5% range to attain a safe zone vis a vis the USD.

26/09/2022

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Vietnam Macro Weekly_20220919

SBV-bills have been reactivated. After a rough week for liquidity, pressure for VND-denominated liquidity in the banking system seems to have possibly abated. Daily reverse repo volume has gradually declined, from the peak of VND 15 tn to an average of VND 1 tn. The winning rate was at 4.6% p.a, slightly up 10 bps from last week. Interestingly, SBV-bill issuance has been reactivated, with a total of VND 44.6 tn in 7-day T-bills at 4% (140 bps higher than the previous rate). We saw that the rates in open market operations have been gradually rose, probably from the SBV’s intention to prepare in advance the market’s expectation of possibly acute Fed rate hikes (which places pressure from market forces on the VND). Overall, a total of VND 59.64 tn has been withdrawn out of the system. Closing the week, the overnight interbank rate was more stable, at 4.5%. 

19/09/2022

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Monthly Fixed Income Report – August 2022: Liquidity in the banking system continued to be in focus

SBV T-bill issuance saw steady issuance in August, cycling back into the market. The VND overnight interbank rate cooled down, as the liquidity shortage situation calmed.

Credit growth reached 16.2% YoY, slightly slowing down from the peak in May. Credit growth extension was been granted by the SBV to domestic banks in early September.

The VND was quite stable in August. The SBV has revised its ask-price in early September, to prepare in advance for possible rising USD strength brought on by the market’s expectation of another Fed rate hike.

Trading volume was improved significantly in the primary market. Winning yields gradually ticked up, whereas the spread between the primary and secondary market narrowed.

Bond yields in the secondary market were flat during August, reflecting improvement in liquidity.

13/09/2022

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