Central bank pumps US$278m into money market

25-Feb-2008 Intellasia | Reuters | 7:48 AM Print This Post

Vietnam’s central bank bought 4.46 trillion dong (US$278 million) of debt from commercial banks on Friday, bringing the total cash it has pumped into the market this week to relieve a liquidity shortage to 34.46 trillion dong.

The purchase for 21 days in open market transactions was at interest rates of 13%, down from 14% and 15% on Thursday February 21 when it bought short-term debt worth 10 trillion dong, central bank data showed. Liquidity in the market is tight and banks have been raising their interest rates since last month, partly to attract funds needed for higher reserve requirements.

From February 1 the central bank raised the level of reserves foreign and domestic banks must keep against their dollar and dong deposits of up to 12 months to 11% from 10%. The central bank has eased restrictions on bank loans to local stock market investors but, in general, it has moved to reduce cash in the economy to tame inflation and is forcing banks to buy Treasury bills worth 20.3 trillion dongs next month.

 


Category: Finance

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