Vietnam c.bank reportedly sells over US$10 billion from FX reserves
The move is expected to help accommodate the momentum of the exchange rate and the pressure on foreign exchange reserves.
The State Bank of Vietnam (SBV) has reportedly sold over US$10 billion from its foreign exchange reserves amid growing pressure on the exchange rate, according to the Viet Dragon Securities Company (VDSC).
|The SBV expects to continue selling foreign currencies in case of market high demand. File photo|
The report noted deposit balance of the Vietnam State Treasury (VST) at the state-owned banks was about VND110 trillion ($4.73 billion), continuing to support the liquidity of the Vietnamese dong (VND) on the market. In addition, the VST also bought $75 million from commercial banks last week, equivalent to VND1.74 trillion injected into the banking system.
In line with such a move, the SBV on June 21 started conducting outright bill sales with a small amount of VND200 billion ($8.6 million). In the next few days, the central bank continued to withdraw VND with an accumulated amount of VND70 trillion ($3 billion).
The auctioned interest rates increased from 0.3% on the first day to 0.7% in the next three days. Despite the effort to monitor the VND supply to narrow the swap rate gap, VND interbank lending rates bounced back slightly to 0.5% on June 24 from 0.3-0.4% a few days earlier.
“We think that this action will help accommodate the momentum of exchange rate and the pressure on FX reserves,” stated the VDSC.
Last week, Deputy head of the SBV’s Monetary Policy Department Pham Chi Quang noted the agency is ready to sell foreign currencies in case of high demand in the market.
Quang expected this would help ensure banks and credit institutions have the means to meet the demand for foreign currencies from individuals and organizations.
Credit demand on the rise
Meanwhile, Vietnam’s credit growth maintained its momentum, reaching 8.2% as of June 10 compared to 7.6% on May 23. Large banks were reported to approach their respective credit growth quotas, thereby, limiting the pace.
On the funding side, deposits expanded at a slow pace also, which might be attributed partially to the USD outflow, noted the report.
Deposit growth was 3.8% as of June 10, only 0.3% higher than that of May 23. Deposits in foreign currencies were the negative factor, dropping 2.3% year-to-date, deteriorating from the -0.1% decline as of May 23.
“Those factors contributed to a stably low VND interbank rate level. The abundant liquidity also led to well-controlled bond yields in the circumstance of global rate hikes and high success rate for government bond auction,” stated the VDSC.
On June 15, most of the bonds were successfully issued except the 20-year bonds. This contradicts the situation at the end of the first quarter when the success rates were low and the auctions were considered failed for many terms.
The winning yields for the 10-year and 15-year terms increased by three bps compared to the last auction. Given the decline in the costs of borrowings on Market 2, the demand for bonds was supported. On the secondary market, bond yields did increase at a moderate pace (6-18 bps) due to the Fed’s rate hike.
|After the Fed’s steep rate hike on June 16, the USD interbank rates increased sharply. The overnight rate nearly doubled from 0.85 - 0.90% to 1.5 - 1.6% and continued to stay high. USD rates were quoted in the 1.5-1.7% range for the one-week term and 1.6-1.8% for the two-week term. As a result, the USD/VND exchange rate gaps deepened in the negative zone on June 16: from -0.8% to -0.4% for the overnight term, from -0.6% to -0.1% for the one-week term, from -0.5% to -0.1% for the two-week term and from -0.3% to -0.0% for the one-month term.|
- Vietnam's positive outlook lures foreign investors back to stock market
- Banking industry urged to complete digital transformation legal framework
- VND remains most stable currency in region: Report
- Big techs pay Vietnam US$20 million in taxes in three-month period
- Vietnam’s consumer demand for gold surges 11%
- Vietnam’s Q3 GDP growth at 10.8%: Standard Chartered
- Hanoi's budget revenue up 25% in January-July period
- Vietnam's corporate bond market estimated at US$11 billion in H1
- Credit demand set to grow in the final half of 2022
- About 60% of Vietnamese adults have bank account: Napas
Vietnam needs financial resources to advance gender equality
Over US$34 billion set to pour into Vietnam’s real estate market this year
“Produce more from less”: Danish agricultural philosophy for Vietnam
One Year After, One Year Lost
Cultural industry to contribute 5% of Hanoi’s GRDP by 2025
Vietnam is stunning in South Korean artist’s MV
Hanoi focuses on supporting business recovery: Mayor
Construction of Hanoi’s Ring-road No.4 set to begin next June
Dolphin shows fascinate audiences in Hanoi