Interbank interest rates climb to highest levels in three months

By Quynh Trang   October 8, 2023 | 07:40 pm PT
Interbank interest rates climb to highest levels in three months
A Vietnamese flag flies atop the State Bank building, near the Vietcombank and Bank for Investment and Development of Vietnam buildings, in central Hanoi, Vietnam November 23, 2017. Photo by Reuters/Kham
Overnight lending interest rates among banks have risen from close to 0% seven days ago to above 1%, the highest rate in the last three months.

On Oct. 5 the rate was 1.32% per year, 1 point higher than a week earlier, according to data from the State Bank of Vietnam.

For one week the rate has risen from 0.35% to 1.55%, and for two-week terms from 0.55% to 1.89%.

The rates rebounded after the central bank resumed the issue of T-bills after a hiatus of months.

In just two weeks, it mopped up VND140 trillion (US$5.9 billion) from the interbank market by issuing T-bills with interest rates of 0.7-1.3% per year.

Experts said this was meant to reduce the impact of carry trade, interest rate trading activities, when there is excess liquidity.

The interbank rates fell steadily and steeply since May, again reaching the record lows achieved during Covid, amid abundant liquidity and sluggish credit growth in the banking system.

Through August and September the average overnight interest rate had remained at 0.2%.

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