Home » Banking & Finance » Banks borrow VND11tril. after 3 days of interest rate slash

Banks borrow VND11tril. after 3 days of interest rate slashWhen the ceiling deposit rate falls to 8 percent, the interest rate on the open market also reduces to 7 percent/year. Immediately, transactions on the open market operations (OMO) strongly increase.

The central bank pumped up to VND10,831 billion (over $515 million) in three days, equivalent to the total supply in the previous 6 weeks.

According to data of the State Bank of Vietnam (SBV), through the open market operations (OMO), on December 26, the bank pumped out VND4,097 billion into the system to support commercial banks.

However, compared to the December 25 session, the volume was down by nearly VND1,000 billion.

Also on December 26, the SBV withdrew a modest volume of capital, VND309 billion, bringing the net pumping volume of VND3,788 billion in the day.

OMO transactions suddenly became active after the short-term interest rate ceiling went down from 9% to 8%/year.

Almost immediately, starting from the December 24 session, interest rates on the open market has also decreased from 8% to 7% / year.

Only in three sessions this week, the central bank pumped VND10,831 billion into the OMO system, higher than the total supply of money in the previous 6 weeks.

The unexpectedly strong increase can be explained by the fact that banks need additional capital to satisfy the demand for more loans and guarantee funds for the pre-New Year period.

US$1 = VND20,800

(Vietnam Net)

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