Liquidity in the banking system has improved in the past week, pushing the State Bank of Viet Nam to make a net withdrawal of VND60 trillion (US$2.55 billion).

According to the latest monetary report by Saigon Securities Incorporation (SSI), the central bank issued bills worth VND42.95 trillion last week with terms of 7, 14, 28, 91 and 140 days, of which 140-day bills valued at VND26 trillion.

"This move demonstrates SBV’s efforts to regulate the monetary market more flexibly in a move to avoid tense fluctuations and consolidate the stability of the market," SSI said.

The improved liquidity has also helped the interest rates of Vietnamese dong loans in the inter-bank market cool down after hitting the highest level since the beginning of the year due to high demand.

By the end of last week, the rate for overnight dong loans in the inter-bank market slid by 0.8 percentage points against the previous week to 2 per cent, equal to the interest rate of US dollar loans.

"The balance rate is suitable to control and avoid putting pressure on the exchange rate," SSI analysts said. — VNS