The interest rate for Vietnamese dong loans in the inter-bank market has hit the highest level since the beginning of the year due to high demand.

Accordingly, the rate for overnight loans last week surged sharply by 1.96 percentage points against the previous week, closing the week at 3.22 per cent.

The rates for one-week, two-week and one-month loans were 3.5 per cent, 3.58 per cent and 3.78 per cent, up 2.11, 2.07 and 2.02 percentage points, respectively.

Last week, the State Bank of Viet Nam (SBV) also offered bills at five auctions at higher interest rates (at 1.75 per cent and 2.25 per cent for 28-day and 91-day bills) to withdraw money from commercial banks, however, no auction was successful.

In the inter-bank market, the interest rates for US dollar loans last week also inched up, ending the week at 2.13 per cent for overnight loans, 2.23 per cent for one-week loans, 2.33 per cent for two-week loans and 2.47 per cent for one-month loans.

Industry insiders attributed the decline in the dong liquidity at commercial banks last week to banks using the dong to buy the dollar from SBV.

Though there has been no official report on the amount of dollar sold by the SBV, it was estimated the amount was significant. This meant that the SBV withdrew a significant amount of dong from commercial bank through the sale. — VNS