Intellasia East Asia News – SSI: Interbank interest rates bottomed, credit recovers strongly

The latest report of Saigon Securities Incorporation (SSI) mentioned that in the week of March 14th to March 18th, the State Bank of Vietnam (SBV) injected 411 billion dong into the banking system through 14-day reverse repo transactions with interest rate of 2.5 percent per annum. Meanwhile, 678 billion dong of bills matured in the week. The total value of bills in circulation slightly declined to 1.430 trillion dong.

According to the results of the SBV’s survey on credit trends, banks predicted the credit growth at 5.3 percent in the first quarter (Q1) of 2022 and estimated it to be 14.1 percent in the whole year 2022.

In fact, data of the SBV showed that as of March 10th, the credit growth reached 3.11%, about two percentage points higher than the same period of last year and by 0.6 percentage point compared to the growth recorded on February 25th.

The strong recovery of credit in the first months of 2022, according to SSI, reflected the gradually increasing credit demand of businesses after being interrupted by the epidemic. This result also comes from the efforts to inject cheap capital of the banking system through preferential lending programmes.

Specifically, Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) is implementing an incentive credit programme with a scale of 49 trillion dong for small and medium-sized enterprises with interest rates ranging from 5.6 percent to 8.3 percent per annum.

Similarly, BIDV is also applying a 200 trillion dong preferential credit package, in which 100 trillion dong are for individual customers borrowing short-term capital for production and business activities with interest rates just from five percent per annum (for terms of less than six months) and 5.5 percent per annum on terms from six to 12 months.

“We maintain the view that the interest rates in the market have reached the lowest points and are expected to inch up towards the end of the year. The increase in interest rates will heavily depend on the economic recovery and inflation developments,” said SSI.

In the foreign exchange market, the US Federal Reserve (Fed) decided to raise the basic interest rates for the first time in more than three years. The agency also revised some forecasts for the US economy, such as lowering its growth forecast for 2022 from four percent in December 2021 to 2.8%, or predicting that the inflation rate by the end of 2022 to be about 4.3 percent much higher than the two-percent target.

“Overall, the Fed’s announcements did not come as much of a surprise and kept the market relatively stable. Excepting for the increase in the US government bond yield of 15 basis points to 2.15%, the US dollar (through the US dollar index (DXY) barely changed after the Fed’s meeting and ended the week with a decrease of 0.9%,” said SSI.

In Vietnam, the trading of dong was fairly stable. In the interbank market, the US dollar/dong exchange rate was traded stably around 22,870 dong per US dollar, while the rate listed at commercial banks fell by 10 dong, closing the week at 22,690 23,000 dong per US dollar.

The domestic gold price has rapidly cooled down, but the pace is much slower than the world gold price. The world gold price dropped significantly by 3.4 percent in the past week after concerns about China’s closure, while the domestic gold price only decreased by 0.4%, being traded around 68 69 million dong per tael.

 

Category: Finance, Vietnam


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