SBV continues net withdrawal of over 2.6tr dong on OMO on Oct 12

After issuing more than 1.8 trillion dong worth of treasury bill on October 10 and 11, the State Bank of Vietnam (SBV) continued withdrawing money on open market operations (OMO) in the context of stable liquidity.

On October 12, the central bank continued to issue 2.197 trillion dong worth of T-bill on OMO through the outright method, rising about 75 percent against the issuing volume in the previous day.

Of which, the volume of T-bill for 28-day and 91-day tenors remained unchanged from a day earlier with one trillion dong and 197 billion dong, at the coupon rate of 5.1 percent and 6.5%. Especially, the central bank issued one trillion dong for 56-day tenor, 20 times higher than the issuing volume in a day earlier, at the coupon rate of 6 percent p.a.

Thus, after about 16 weeks of suspension for T-bill sales on OMO, the central bank resumed this operation continuously in the past three days with an aim to withdraw money.

Vu Thanh Tu Anh, director of Fullbright Economic Teaching Programme, said that commercial banks are now in the stagnancy situation for liquidity. Particularly, as of August 31, 2012, the total money supply (M2) was estimated to increase 10.37 percent meanwhile the total outstanding loans (as of September 20) increased about 2.35 percent from the end of 2011.

Together with the outright operation, the central bank continued to carry out the reverse repo operation on OMO with the issuing volume on October 12 at 393 billion dong for 7-day tenor at the interest rate of 8 percent p.a.

In week, the volume of repo transactions on OMO decreased from previous weeks, with an average trading volume of about 1.05 trillion dong per day.

October 12 was also the maturity date for the loan worth 828 billion dong on OMO, therefore, along with the withdrawal of nearly 2.2 trillion dong via issuing T-bill with outright operation, the central bank also made a net withdrawal of 435 billion dong via repo operation, leading to a net withdrawal of 2.632 trillion dong on October 12.

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