Macro Report

The SBV has temporarily suspended operations on the open market. Accordingly, reverse repos and the T-bill balance stood at zero during the past 3 weeks. However, a large amount of VND was still pumped into the market through foreign currency purchases. In the past week, more than $2.5 bn USD (approximately VND 59 trillion) were sold to the SBV and the STV. Interbank interest rates extended previous declines, and overnight interest rates fell below 1.0% per annum. (the lowest level in more than 18 months) in the middle of last week, and rebounded due to high demand for VND as the Lunar New Year is coming. At the end of the week, the overnight rate was 2.6% p.a. (+ 155 bps), whereas the 1-week rate was 2.89% p.a. (+136 bps). The ON rate differential of VND-USD has changed from negative to positive. Term deposit interest rates are stable at 4.1-5.0% per annum for periods of less than 6 months. Meanwhile, the 6-12 month term range was at 5.5-7.4% per annum, whereas the 12-13 month tenure range was at 6.4-7.5% per annum.  

The SBV has taken a bit of a furlough on the open market, temporarily on the sidelines regarding open market operations, reverse repos, and the fact that the T-bill balance has stood at zero during the past 2 weeks. A small amount of VND was still pumped out through transactions of selling foreign currencies to the SBV (about $200 mn USD equivalent). Interbank liquidity was abundant, as interest rates dropped sharply to 1.47% p.a. for overnight rates (-55 bps) and 1.8% p.a. for the 1 week rate (-68 bps). The ON rate differential of VND-USD has changed from positive to negative.

The open market took a break last week and there were no new transactions; reverse repos and the T-bill balance were also kept at zero. A small amount of VND was still pumped out through transactions of selling foreign currencies to the SBV (about $200 mn USD equivalent). Interbank rates increased by 11 bps to 2.017% p.a. for the overnight rate; but still lower than the T-bill rate. The gap between VND and USD interbank rates were 0.3-0.8% p.a.

There were no new transactions in the open market last week, while VND 19.5 tn was net withdrawn due to the 14–day reverse repo transaction period having expired. The reverse repo and T-bill balances are both at zero. However, the liquidity of the banking sector improved significantly thanks to the abundant supply of VND from large commercial banks, and from transactions of selling foreign currencies to SBV. Interbank rates dropped sharply to 1.9% p.a. for the O/N tenure (at -57 bps WoW), and at 2.53% p.a. for the one-week tenure (at -23 bps WoW). The gap between VND and USD interbank rates narrowed to a range of 0.3-0.8% p.a.

There were no new transactions in the open market last week, while VND 36.4 tn was net withdrawn due to the 14-day reverse repo transaction period having expired. The reverse repo balance decreased accordingly, currently standing at VND 19.5 tn. Liquidity in the banking sector improved significantly after deposits originating from the State Treasury returned to commercial banks. Interbank rates sighed with relief, trending downwards as a result to close the week at 2.47% p.a. for the O/N tenure (at -120 bps WoW), and at 2.76% p.a. for the one-week tenure (at -114 bps WoW).

There was an improvement in interbank liquidity improved last week, as large commercial banks supplied more VND into the market. The SBV also continued to net inject a total of VND 1.627 trillion via open market operations. Abundance of cash led interbank interest rates to cool down, closing the week at 3.68% p.a. for the O/N tenure (at -34 bps WoW), and 3.9% p.a. for the one- week tenure (-20 bps WoW). Term deposit interest rates were unchanged from last week, ranging from 4.1-5.0% p.a for less than 6 months, while the 6-12 months term range was at 5.5-7.5% p.a, whereas the 12-13 month tenure range was at 6.4-7.9% p.a.

Last week, conditions of compressed liquidity in the domestic banking sector persisted despite liquidity injections by the central bank and foreign currencies sold to the SBV. In detail, the central bank continued to net inject VND 3.3 tn into the financial system, and banks sold about $500 million USD to SBV (equivalent to VND 11.5 tn). No bills were issued, and none were outstanding. Also, VND 34.6 tn was lent out via reverse repo transactions for a 14-day term at 4% p.a, while VND 31.3 tn worth of the 7-day reverse repo expired.

Last week, a compressed liquidity situation in the domestic banking sector continued despite liquidity injections by the central bank. In detail, the central bank continued to net inject VND 62.2 tn into the financial system. No bills were issued, while VND 13 tn of 7-day bills expired. Also, VND 49.2 tn was lent out via reverse repo transactions, 92% of which was charged 4% p.a. and 8% was charged 4.5% p.a, while no bills expired. Interbank rates rose across tenures, closing the week at 3.93% p.a. for the O/N tenure (at +17 bps WoW), and at 3.99% p.a. for the one-week tenure (at +15 bps WoW). 

Last week exhibited compressed liquidity in the domestic banking sector. Interbank rates ascended strongly across tenures, closing the week at 3.76% p.a. for the O/N tenure (at +178 bps WoW), and at 3.84% p.a. for the one-week tenure (at +159 bps WoW). It seems one of the catalysts came in the form of Ministry of Finance Circular 58/2019 (effective this month, on State Treasury account management at commercial banks), as presently the State Treasury needs to transfer all the balances at its commercial account to its own designated account at the SBV transaction office at the end of each day.

Last week, liquidity in the banking sector improved slightly. Interbank rates fell strongly across tenures, closing the week at 1.98% p.a. for the O/N tenure (at -22 bps WoW), and at 2.25% p.a. for the one-week tenure (at -15 bps WoW).  The central bank turned to net withdrawals of VND 8 tn from the financial system. VND 38 tn of 7-day bills was issued at 2.50% p.a., while VND 46 tn of 7-day bills expired. Also, there were no reverse repo transactions that were lent out or became expired.

Last week, liquidity in the banking sector tightened slightly. Interbank rates fell strongly across tenures, closing the week at 2.20% p.a. for the O/N tenure (at +35 bps WoW), and at 2.40% p.a. for the one-week tenure (at +28 bps WoW).  The central bank continued to net inject VND 6 tn into the financial system. VND 46 tn of 7-day bills was issued at 2.50% p.a., while VND 52 tn of 7-day bills had expired. Also, there were no reverse repo transactions that were lent out, nor those expired.

Last week, liquidity in the banking sector tightened slightly. Interbank rates shrugged off the slight change, falling strongly across tenures and closing the week at 1.85% p.a. for the O/N tenure (at -27 bps WoW), and at 2.13% p.a. for the one-week tenure (at -24 bps WoW).  The central bank continued to net inject VND 20 tn into the financial system. VND 52 tn of 7-day bills was issued at 2.50% p.a., while VND 72 tn of 7-day bills expired. Also, there were no reverse repo transactions that were lent out or expired.

Last week, liquidity in the banking sector tightened slightly. Interbank rates rose across tenures, closing the week at 2.12% p.a. for the O/N tenure (at +44 bps WoW), and at 2.36% p.a. for the one-week tenure (at +44 bps WoW). The central bank continued to net inject VND 15 tn into the financial system. VND 72 tn of 7-day bills was issued at 2.50% p.a., while VND 87 tn of 7-day bills expired. Also, there were no reverse repo transaction lent out or getting expired.

Last week, liquidity in the banking sector remained ample. Interbank rates decreased across tenures, closing the week at 1.68% p.a. for the O/N tenure (at -32 bps WoW), and at 1.92% p.a. for the one-week tenure (at -38 bps WoW).  The central bank returned to net inject VND 2.5 tn into the financial system. VND 87 tn of 7-day bills was issued at 2.50% p.a., while VND 90 tn of 7-day bills expired. Also, there was VND 497 bn coming due via reverse repo transactions.

Last week, liquidity in the banking sector retained characteristics of ample liquidity. Interbank rates decreased across tenures, closing the week at 2.0% p.a. for the O/N tenure (at -30 bps WoW), and at 2.30% p.a. for the one-week tenure (at -23 bps WoW).  The central bank continued to net withdraw VND 2.5 tn out of the financial system. VND 90 tn of 7-day bills was issued at 2.50% p.a., while VND 87 tn of 7-day bills expired. Also, there was VND 497 bn being lent out via reverse repo transactions.