Interbank interest rates jumped to 17%

According to data from the Vietnam Interbank Market Research Association (Vira), the average interbank offered interest rate in VND on February 3 increased sharply from 2 percentage points to 7.9 percentage points for most terms of one month or less.

Specifically, the overnight loan interest rate – the key term accounting for the majority of transactions – increased to 17%; 1-week term up to 15%, 2-week term up to 6.4% and 1-month term up to 9.5%.

At the same time, the average USD interbank offered interest rate increased slightly by 0.01-0.04% in all terms. Overnight to one-month term interest rates range from 3.6% to 3.8%.

On the valuable paper mortgage lending channel (OMO), session 3/2, the State Bank offered bids of 60,000 billion VND for a 7-day term, 37,000 billion VND for a 28-day term and 21,000 billion VND for a 56-day term, with interest rates all at 4.5%. In total, the State Bank offered a bid of 118,000 VND on the valuable paper mortgage lending channel.

In total, there were more than 80,900 billion VND winning bids, including 7-day, 28-day and 56-day terms. The State Bank does not offer T-bills for bidding.

Thus, in yesterday’s trading session, the State Bank net injected more than 65,000 billion VND into the market. The total circulating volume on the mortgage channel increased sharply to more than 441,200 billion VND, the highest ever.

Talk to VnExpressMr. Nguyen Hoan Nien, analyst at Shinhan Securities, said that the interest rate of 17% is the highest in the past ten years. This level appeared at the end of 2010-2011, a period when the market had quite negative developments.

However, according to him, the latest data shows that overnight interest rates are currently down to 9.5-10%%, indicating that the 17% spike in interest rates may only be temporary. This development forces the State Bank to continuously inject money in large quantities. Although further monitoring is needed, it is likely that interbank interest rates will set a higher level, lasting at least until the end of the first quarter of this year.

According to experts, there are many factors that cause this condition. The end of January is the time when businesses temporarily pay quarterly corporate income tax. When money is paid into the treasury, it takes time for the treasury to redistribute this cash flow back into the banking system. At the same time, during Tet, businesses also need money to pay Tet bonuses and year-end payments to employees, so banks need to supplement liquidity and accept high-interest loans during peak periods.