Headquarters of the State Bank of Vietnam (SBV). The SBV on Tuesday lent credit institutions more than VNĐ25.5 trillion with a term of 14 days and an interest rate of 4.25 per cent per year. — Photo sbv.gov.vn

The State Bank of Việt Nam (SBV) on Tuesday took measures including issuing treasury bills (T-bills) and net injecting money on the open market operation (OMO) channel to stabilise the market in the face of a surging USD/VNĐ exchange rate.

Accordingly, the SBV lent credit institutions more than VNĐ25.5 trillion (US$1 billion) with a term of 14 days and an interest rate of 4.25 per cent per year, up from the 4 per cent rate in recent times. This is the highest interest rate on the OMO channel since mid-2023.

The SBV also issued VNĐ2.15 trillion worth of 28-day T-bills with an interest rate of 3.73 per cent. Two credit institutions won the bidding.

The SBV’s move is considered an important operation in its exchange rate management. Accordingly, the concurrent use of T-bills and OMO aims to serve the twin targets of guaranteeing liquidity for the banking system to maintain low interest rates in the market, and easing pressure on the USD/VNĐ exchange rate through narrowing the dollar and the đồng interest rate difference in the interbank market.

Trần Đức Anh, Director for macro-economy and market strategy at the KB Securities Vietnam JSC, said the SBV has carried out many measures for stabilising exchange rates like withdrawing money via T-bill issue.

However, such moves are still not strong enough to stabilise foreign exchange rates as inter-bank interest rates keep growing. Therefore, the SBV may take stronger interventions soon.

SBV Deputy Governor Đào Minh Tú affirmed that exchange rates are a critical factor in macro-economic management. They affect not only the value of the đồng or people’s purchasing demand, but also policies, macro-economic stability, inflation control, market psychology and investors’ trust.

Therefore, the SBV always views stipulating exchange rates as one of the extremely important tasks, Tú said, noting that it will continue flexible management to ensure exchange rate changes in line with the common trend, while the foreign currency balance is also guaranteed for legal demand in the market.

On April 23, the central bank set the daily reference exchange rate at VNĐ24,275 per dollar, up VNĐ3 from the previous day. — VNS