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Interbank interest rates in dong drop to below 5pct/yr
The recently-released figures from the State Bank of Vietnam (SBV) showed that the highest interbank interest rate touched 18.48 percent per annum (p.a.) for 12-month term while the lowest level is 4.5 percent p.a.
Particularly, in short terms, the interbank interest rates tended to fall to 5-7 percent p.a. whereby the lowest level is 4.5 percent p.a. for one week term, 2-weeks at 5.95 percent p.a., overnight at 7.22 percent p.a., one month at 7.54 percent p.a. and 3-6 months at 12 percent p.a.
In comparison with the deposit interest rate in the market 1 (M1), the capital mobilisation market from residents, popularly at 4 percent for less than 1-month terms and 12 percent per year for over one month term, the interbank interest rates tend to be equal. Earlier, the interbank interest rates were often higher than the deposit rates in M1.
The falling interest rates resulted in decline of transactions in Market 2 (M2). The central bank’s latest report showed that in the nearly last week of April, the transactions volume in dong reached only nearly 148.9 trillion dong; lower than over 154.1 trillion dong in the previous week. The transaction value in US dollar in the latest week reached over 72.5 trillion dong, lower than over six trillion dong in the previous week.
Some specialists said that the interbank interest rates are returning to the right track: high in long terms and low in short terms. But according to banks, for a long time, M2 saw a clear differentiation between one side with those who are in need of capital but difficult to borrow because they do not meet loan conditions and another side with those who have capital in surplus and lend each other at low interest rates.
Leader of a Hanoi-headquartered bank said the M2 is witnessing very bleak transactions in these days. Banks themselves also do not want to participate as the interest rates are too low and they are afraid of risks with bad debts when lending in the interbank market.
Previously, by the end of 2011, when the liquidity of the banking sector was tense, the interbank interest rate for 1-month term skyrocketed to over 30 percent p.a. According to the data announced by the central bank, on November 7, 2011, the interbank interest rate for 12-month term also exceeded 36.5 percent p.a. The gloomy tendency in the interbank market has appeared from early March 2012 and lasted to the present.
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