SSI Research: credit to grow well in 2nd half of 2021

24-Jun-2021 Intellasia | NDH | 5:02 AM Print This Post

The research centre of Saigon Securities Incorporation (SSI Research) has released the capital market report for the week of June 14th 20th, mentioning that the Open Market Operation (OMO) did not record any new transactions, and the State Bank of Vietnam (SBV) only withdrew 1.08 billion dong due to the maturity of the forward buying item. The interbank interest rates moved sideways and closed the week at 1.135 percent per annum on overnight term and 1.337 percent per annum on one-week term.

According to the SBV, by June 9th, the credit growth of the entire system was 4.9%, while mobilisation growth was 3.3 percent compared to the beginning of the year. Compared to the credit growth and mobilisation as of May 21st of respectively 4.67 percent and 2.68%, the mobilisation has been growing better than credit in the past 20 days. The difference between deposits and credit was widened by about 41 trillion dong. the savings interest rates will continue to be stable in the short term.

In addition to the impact caused by the Covid-19 pandemic, some commercial banks have used up their credit growth limit assigned by the SBV, causing the disbursement to slow down. The SBV is considering extending the credit growth limits of banks. The credit is forecasted to grow well and savings interest rates may inch up in the second half of the year.

US dollar sharply appreciated, other currencies depreciated including dong. The recent focus was the June meeting of the Federal Open Market Committee (FOMC) the policy-making body of the US Federal Reserve. At this meeting, the Fed forecasted the first interest rate hike to be in 2023, instead of 2024 as predicted in the previous meetings. In particular, 11 out of the 18 FOMC officials said that interest rates will increase two times in 2023, and the remaining seven officials expected the interest rate hike to be in 2022. The Fed’s Chair also announced that he has begun to discuss the time to cut the 120 billion US dollar bon-buying programme as the US economy is recovering well. The US GDP growth is forecasted to increase from 6.5 percent to seven percent, and inflation is expected to go up from 2.4 percent to 3.4%.

Although the monetary easing policies are still being maintained, it is clear that the pressure to adjust policy of the Fed is increasing and has had a strong impact on the global foreign exchange market. The US dollar index sharply surged to 92.2 the highest level in more than two months. Other currencies all depreciated against the US dollar in the past week ( euro 2%; GBP 2.1%, CNY 0.85%, JPY 0.5%, CAD, etc.). The US government bond yield with terms of less than 10 years fell sharply; and gold price also dropped by six percent, falling to the lowest level of 1,764 US dollar per ounce.

In Vietnam, under the impact of the international market and information about the trade deficit of about 1.35 billion US dollars in the first half of June (accumulated deficit of nearly two billion US dollars from the beginning of 2021 to June 15th), the US dollar/dong central reference rate increased by 47 dong per US dollar.

The listed exchange rate of commercial banks grew by 50 dong per US dollar for buying and 20 dong per US dollar for selling, reaching 22,800/23,110 dong per US dollar. The free exchange rate rose by respectively 65 dong and 85 dong per US dollar for buying and selling rates, reaching 23,095/23,165 dong per US dollar.

Although the domestic foreign currency supply and demand is quite balanced, remittances and Foreign Direct Investment (FDI) are still relatively positive, the US dollar/dong exchange rate may be under upward pressure in the short term due to the uptrend of the US dollar in the international market.

 

Category: Finance, Vietnam

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