Macro Report

Macro Report
Monthly Fixed Income Report – November 2023: Abundant liquidity back to town

The SBV stopped issuing bills, as forex risk subsided.

Overnight interbank rate was back to the lowest range in Nov; VND-USD interest rate gap widened.

Deposit rates continue to decrease; lending rates for new loans back to 2021 levels.

The SBV permitted additional credit growth for banks in need

The gap between official and unofficial USD/VND widened

Government bond yields retraced in both the primary and secondary market.

12/12/2023

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Vietnam Macro Weekly_20231211

Overnight interbank interest rate stayed at low levels. In the sphere of open market operations, neither reverse repo nor SBV treasury bill issuance was utilized. The SBV as it has recently done has continued to offer VND 1 tn of 7-day reverse repos per day, and VND 15 tn worth of SBV-issued bills expired at the same time. All bills expired last week. The overnight interbank interest rate stayed at around 0.15% (unch) and the VND-USD gap kept at approx. -500 bps.

11/12/2023

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Vietnam Macro Weekly_20231204

Deposits at SoCBs fell to the lowest level ever. In open market operations, neither reverse repo nor SBV treasury bill issuance was utilized, though the SBV as it regularly does as of late has offered VND 1 tn of 7-day reverse repos per day. Simultaneously, VND 58.2 tn worth of SBV-issued bills expired at the same time, equivalent to the same amount of liquidity coming back to the system, and outstanding bills having dropped to VND 15 tn as of Friday. All bills will be expired this week.

04/12/2023

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Vietnam Macro Weekly_20231127

Interbank interest rate dropped back to the low range. In review, it has been another inactive week in open market operations. Neither reverse repo nor SBV treasury bill issuance was utilized, though the SBV as it regularly does has offered VND 1 tn of 7-day reverse repos per day. Simultaneously, VND 25.5 tn worth of SBV-issued bills expired at the same time, equivalent to the same amount of liquidity coming back to the system, and outstanding bills dropped to VND 73.2 tn as of Friday.

27/11/2023

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Vietnam Macro Weekly_20231120

Interbank interest rate dropped back to the low range. In review, it has been an inactive week in open market operations. Neither reverse repos nor SBV treasury bills issuance was utilized, though the SBV as it regularly does has offered VND 1 tn of 7-day reverse repos per day. Simultaneously, VND 55.9 tn worth of SBV-issued bills expired at the same time, equivalent to the same amount of liquidity coming back to the system, and outstanding bills dropped to VND 98.75 tn as of Friday. There will be another VND 25.5 tn worth of bills that expire this week, and if there is no other new SBV-bill issuance for the rest of the year, all outstanding bills will be finished on Dec 5th. As a result, the overnight interbank interest rate quickly cooled down to the low range of 0.3% (-40 bps) and the VND-USD gap widened to approx. -480 bps.

20/11/2023

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Vietnam Macro Weekly_20231113

SBV stopped bill issuance. The SBV offered new bill issuance to the market 3 calendar days last week, halting issuance from Thursday onwards. Hence, there was only VND 15 tn worth of bills issued during the week, in the form of 28-day tenures averaged at 1.2% (-30 bps WoW), while simultaneously VND 65 tn worth of SBV-issued bills expired at the same time. Therefore, the SBV injected a net VND 50 tn of liquidity, and outstanding bills dropped to VND 154.6 tn as of Friday (while there will be another VND 55.9 tn worth of bills to expire this week). On the other hand, the overnight interbank interest rate quickly cooled down to 0.75% (-20 bps) and VND-USD gap remains at approx. -400 bps

13/11/2023

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Monthly Fixed Income Report – October 2023: Another month of active SBV-bill issuance

The SBV continued to issue bills for the purpose of currency stability protection.

Overnight interbank rate averaged at 1% during October; VND-USD interest rate gap narrowed.

Deposit rates continue to decrease; lending rates for new loans back to 2021 levels.

The VND experienced depreciation pressure, but fundamental supporting factors remain intact.

STV published a higher 4Q23 issuance plan, with more appetite w/ regards to 5Y tenure.

Yields in the secondary market rose for active tenures.

10/11/2023

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Vietnam Macro Weekly_20231106

Overnight interest rate cooled down. The SBV continues to offer new bill issuance to the market via rate auction mechanism and in total, there was VND 58.2 tn issued during the week, in the form of 28-day tenure at 1.5% while simultaneously only VND 46.9 tn worth of SBV-issued bills expired at the same time. Therefore, the SBV slightly withdrew a net VND 11.3 tn of liquidity, and outstanding bills improved to VND 204.6 tn as of Friday (vs. VND 193.3 tn the week before). 

06/11/2023

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Vietnam Macro Weekly_20231030

SBV-bill volume accelerated towards weekend. The SBV continues to offer new bill issuance to the market via rate auction mechanism, and volume accelerated towards weekend. During the week, there was about VND 25.55 tn to issue, while simultaneously over VND 73.8 tn worth of SBV-issued bills expired at the same time. Therefore, a net VND 48.25 tn of liquidity was back in circulation, and outstanding bills lessened to VND 193.35 tn as of Friday (vs. VND 241.6 tn the week before). Yields were stable, at around 1.45% p.a., while the overnight interbank interest rate has been more volatile, reaching the peak at 2.8% p.a. at mid-week and quickly cooled to 1.7% (+20 bps WoW) on Friday.

30/10/2023

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Vietnam Macro Weekly_20231023

Interbank interest rate ticking up. Last week, the SBV continues to offer new bill issuance to the market via rate auction mechanism. There was a total of VND 55.9 tn of 28-day bills issued, with a deceleration in daily vol., with an increase in yields. At the same time, there was the first batch of SBV-bills (VND 20 tn) expiring. Outstanding bills cooled down to VND 241.6 tn (from the peak of VND 255 tn). Closing the week, SBV-bills yielded 1.45% p.a (+50 bps WoW), while overnight interbank interest rates also steepened, at 1.5% pa (+120 bps WoW).

23/10/2023

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Vietnam Macro Weekly_20231016

Overnight interbank interest rate cooled down. Last week, there was a total of VND 65 tn of 28-day SBV bills being issued through rate bid mechanism. Yields cooled down, closing the week at 0.95% p.a. (-34 bps WoW).

16/10/2023

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Monthly Fixed Income Report – September 2023: Actions taken to limit exchange rate pressure

The SBV issued bills for the first time since Mar ‘23 to limit currency depreciation.

The interbank rate ticked to over 1% in early Oct.

Credit demand jumped in late Sept, but concerns remain as it might be a cyclical factor.

Deposit rates declined another 50 bps in September, while several banks offered attractive lending rates for consumer refinancing loans.

The VND experienced depreciation pressure in September, as the currency faced a rising dollar and sustained high interest rates in many other countries.

Yields in the primary government bond market were almost flat; STV lowered offering volume.

Yields in the secondary market rose for active tenures; relatively calm towards SBV bills issuance

10/10/2023

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Vietnam Macro Weekly_20231009

Overnight interbank interest rate ticked up. Last week, there was a total of VND 46.9 tn of 28-day SBV bills being issued through the rate bid mechanism, Winning rates were on the rise, closing the week at 1.3% p.a. In total, the SBV has issued VND 140.7 tn worth of 28-day SBV bills over the past 2 weeks. As expected, the overnight interbank rate closing the week rose to to 1.4% (from 0.2% last week), and narrowed the USD-VND gap to -380 bps.

09/10/2023

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Vietnam Macro Weekly_20231002

SBV continued to issue bills at a faster pace. Last week, there was a total of VND 73.8 tn of 28-day SBV bills being issued through the rate bid mechanism, accelerating from the pace of VND 10 tn on Monday to VND 20 tn per day as of Thursday. On the last trading day, only VND 3.8 tn has been issued, a much slower volume probably due to higher liquidity demand for end-of-quarter funding rebalance. Winning rates were on the rise, closing the week at 1% p.a. The overnight interbank rate closing the week ticked up slightly to around 0.3-0.4% (from 0.17% last week) and the USD/VND started to cool down to VND 24,275 (-0.24% WTD). 

02/10/2023

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Quick note on the SBV's bill issuance: Same same but different

One of the principal focal points of the market in the past few days was honed in on the resumption of SBV-bill issuance in terms of open market operations. The primary question repeatedly posed involved whether it is an early sign for the SBV tightening cycle. Given this topic is top of mind for the market at the moment, we would like to provide you a bit background to gain a more comprehensive take on the matter.

The SBV has resumed bill issuance since Thursday last week, marking the first move since March 2023. Volume was initially light and set at just VND 10 tn per day at the first 3 sessions, and then  accelerated to VND 20 tn in the latest trading day.

27/09/2023

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