SSI: savings interest rates to bottom out this year and soon rise again

28-Jan-2022 Intellasia | Tri Thuc Tre | 5:02 AM Print This Post

According to the analysis team of Saigon Securities Incorporation (SSI Research), many banks have continued to increase savings interest rates for individual customers due to the high liquidity pressure at the end of the year.

In general, in the past two months, commercial banks have raised their savings interest rates by 0.1 0.5 percentage point, mainly on short terms or term of one year. In addition, the promotional programmes have also been launched to attract idle money from people, in which the interest rate levels through online savings channel are about 0.2 0.3 percentage point compared to the traditional savings channel.

SSI Research assessed that this is just a reasonal trend and the savings interest rates are expected to cool down after that. However, the inflationary pressure will sharply rise in the second half of 2022 and the analysis team expected the interest rates to bottom out in 2022 and the prospect of interest rate increase depends on the recovery of the economy.

According to the base scenario of SSI Research, the savings interest rates will go up by 0.2 0.25 percentage point in the second half of 2022.

In another development, in the past week, the Open Market Operation (OMO) channel was used and the State Bank of Vietnam (SBV) net injected 1.1 trillion dong into the banking system through a 28-day buying forward at interest rate of 2.5 percent per annum. The total amount of bills in circulation through the OMO channel is 1.1 trillion dong.

The interbank interest rates fluctuated in opposite directions, with overnight term almost flat, closing the week at 1.12 percent per annum (down by 0.01 percentage point).

In contrast, the long-term interest rates followed a strong upward trend, particularly for two-week term (up by 0.22 percentage point), when the borrowing needs showed the expectation of interbank interest rates increasing in the near future, as the market is in peak season.

“In general, the pressure on the system liquidity is not yet huge and the shortage is only local in some banks,” said SSI Research.

In the foreign exchange market, SSI Research said that the dong appreciated fairly strongly in the past week. Specifically, the US dollar/dong interbank exchange rate declined by 0.37 percent to 22,628 dong per US dollar. The exchange rate listed in commercial banks decreased by 90 dong per US dollar, closing the week at 22,450 22,760 dong per US dollar.

Thus, the exchange rate has fallen to the lowest level in the past year. This development is similar to the expectation of the analysis team, when the foreign currency supply in Vietnam remains positive. In addition, the dong tends to be stronger at the beginning of the year when the supply of foreign currency is supported by remittances.

In 2022, SSI Research expected the dong to continue to show its strength, slightly increase by 0.5 one percent compared to the end of 2021. However, the developments in the year will be stronger depending on the supply and demand of foreign currencies at that time.


Category: Finance, Vietnam

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