SSI Research: Monetary policy to remain easing in the near future

29-Sep-2021 Intellasia | Doanh nghiep va Tiep thi | 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 September 20th to September 24th.

In the week, there was no new transaction in the Open Market Operation (OMO). The State Bank of Vietnam (SBV) has had almost no regulatory activities in the OMO since the epidemic outbreak in March 2020, showing the view of maintaining abundant liquidity in the banking system (the agency still injects dong via foreign currency buying channel). The interbank interest rates, thus, remained low, closing the week at 0.69 percent per annum for overnight term and 0.8 percent per annum for one-week term.

According to the SBV, as of August 31st 2021, the credit of the entire economy reached over 9,870 trillion dong, up by 7.42 percent over the end of 2020 and equivalent to an increase of 14.9 percent year-on-year. In general, this level of increase is still fairly positive in the context of the complicated developments of the epidemic. This is partly thanks to the cut in lending interest rates and the preferential loan packages to support customers to resume production and business activities of commercial banks. As a result, the lending interest rates have declined by about 0.55 percent per annum by the end of September this year, and by about 1.55 percent per annum compared to the time before the epidemic outbreak.

Savings interest rates have also fallen by about six to 20 percentage points in 12-month term in the first nine months of 2021. The monetary policy easing in the near future will remain to support the economic recovery after the pandemic.

SSI believed that although it is likely that the SBV will not cut the operating interest rates this year, other support measures such as raising credit growth limits can facilitate banks to lower lending interest rates.

In the foreign exchange market, the US dollar/dong exchange rate listed by commercial banks moved sideways in the past week, closing the week at 22,640 22,870 dong per US dollar. The rates on the free market did not record significant changes, staying at 23.035 23,185 dong per US dollar, slightly down by 10 dong per US dollar on buying rate and five dong per US dollar on selling rate.

The trade balance data in the first half of September was not very positive as the trade deficit reached up to 1.5 billion US dollars, but was offset by the disbursement of Foreign Direct Investment (FDI) in September (which was 1.7 billion US dollars, up by 57 percent over the previous month), helping the overall balance of payment stay positive.

As the government is gradually opening the economy, SSI expected the trade balance to improve in the end of the year and help the FDI disbursement have more positive developments. The supply and demand of foreign currencies in the market will be relatively balanced, supporting the US dollar/dong exchange rate to maintain a stable state.

 

Category: Finance, Vietnam

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