Foreign currency liquidity in surplus

01-Oct-2015 Intellasia | VnEconomy | 6:00 AM Print This Post

On the first day implementing new policy on lowering the ceiling deposit rate in US dollars, the dollar/dong exchange rate of commercial banks was kept unchanged, while it fluctuated widely on the interbank market.

On September 28th, the selling price of US dollars at major banks such as the Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank), Export Import Commercial Joint Stock Bank (Eximbank), etc. remained the same at 22,505 to 22,510 dong per US dollar.

On the interbank market, liquidity was recorded at a fairly high level. Exchange rate fell sharply in the early of the day, and that was considered as a reaction to the decision of SBV. However, the exchange rate later rebounded and was traded in the range of 22,470 to 22,495 dong per US dollar.

A staff who directly monitors daily data updates of the SBV talked to VnEconomy that the foreign currency liquidity of the banking system is currently redundant. According to this staff, the most obvious sign is that the US dollar interest rates on the interbank market have been at very low levels, close to zero percent per annum in the recent time. He added that the abundant liquidity is due to the increase of the volume of US dollars hoarded and deposited in banks, and he thought that the purpose is not for interest rate, but the expectation on the further rise of exchange rate.

The decision to lower US dollar interest rate, especially the reduction of US dollar mobilisation rate to zero percent per annum applicable for organisations, brings a boarder message, in which SBV is concretising its commitment to ensure the exchange rate within its band by all means. On the other hand, so far, SBV has twice affirmed to stabilise the exchange rate, not only in the remaining months of 2015, but also in the early months of 2016.

In the late afternoon of September 28th, vice Governor of SBV Nguyen Thi Hong said that the current foreign currency liquidity of the system of credit institutions is in stable condition. Specifically, the lending to mobilisation ratio in domestic market one is only about 80 percent, while it was over 100 percent in the period of 2011-2012; and it is 60 percent if including the foreign borrowings.


Category: Finance, Vietnam

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