FILE PHOTO: A Vietnamese flag flies atop the State Bank building in central Hanoi
HANOI: The overnight interest rate in the interbank market has surged to more than 4%, the highest level in the past nine months, data from the State Bank of Vietnam show.
The rate last Wednesday had increased by nearly four times compared to the end of last week, from 2.15% to 4.14%.
It meant after just one trading session, the rate nearly doubled and reached its highest level since the end of May 2023. It was much higher than the peak level of 2.38% recorded during the peak payment period near the Lunar New Year.
With the surge, the rate for the overnight term is currently even higher than that of one-week to three-month terms.
In the interbank market, the overnight term accounts for up to 90% of the total transaction value.
Along with the overnight term, interest rates at two other key terms also increased sharply compared to the end of last week, of which the one-week term was up from 1.27% to 3.81%; the two-week term was up from 1.39% to 3.02%; and the one-month term was up from 1.85% to 2.55%.
According to experts, the sharp surge in the overnight rate, along with high transaction turnover, meant liquidity of the banking system is showing signs of shortage, but it is only in the short term and will likely cool down soon in the coming trading sessions.
Interbank interest rates have increased significantly after credit growth unexpectedly accelerated in the last month of 2023.
In December 2023 alone, credit of the banking system surged by up to 4.35% compared to the previous month, bringing credit of the whole year to 13.5%.
Experts expect the sharp increase in overnight interbank interest rates will contribute to reducing pressure on domestic exchange rates when the US dollar has strongly recovered in the international market.
The greenback price is currently listed at 24,390 dong per dollar for buying and 24,790 dong per dollar for selling, an increase of 190 dong compared to before the Lunar New Year holiday. — Viet Nam News/ANN
