The State Bank of Vietnam (SBV) also reduced the bill interest rate from 4.2 per cent per year to 4.15 per cent per year this week—the third time this month.

On August 5 this year, the SBV cut the rate from 4.5 per cent per year to 4.25 per cent per year. The rate was then further reduced to 4.2 per cent on August 20.

The SBV still maintains a liquidity support through open market operation (OMO) channel with more than 5.98 trillion VND at a term of 14 days and an interest rate of 4.25 per cent. Compared to previous trading sessions, the OMO term doubled, while the interest rate remained unchanged.

The central bank has reduced the OMO interest rate earlier from 4.5 per cent to 4.25 per cent in the session of August 5.

After continuously maintaining a net withdrawal of liquidity since the beginning of June 2024, the SBV this week injected a net amount of more than 9.1 trillion VND into the banking system.

The SBV’s move to gradually reduce interest rates and stopping treasury bill issuance early this week shows the SBV's orientation to support the liquidity of the banking system to maintain a lower interbank interest rate level shortly, according to a domestic media outlet.

Simultaneously raising the OMO loan term while keeping the interest rate unchanged also shows the bank’s initiative in reducing the interbank interest rate level.

Fibre2Fashion News Desk (DS)