The central bank has lowered the refinancing rate eight times since early 2012 to boost lending. Data showed that total loans rose 3.5 per cent by the end of last June.—Photo ketnoidn

HANOI — The State Bank of Vietnam (SBV) made a decision to cut lending rate on the open market operations (OMO) by 0.5 per cent to 5.5 per cent per annum from July 19 this year.

The move came one day after the central bank asked local lenders to increase lending to achieve 12 per cent credit growth target in 2013.

In addition, the SBV said it would consider raising credit growth limit for specific bank, depending on the loan liquidity and quality.

"This is a positive move. The move will help to reduce the cost of funding for commercial banks, thereby cutting lending rates and borrowing businesses can access more loans", said VinaCapital chief economist Alan Pham.

The central bank has lowered the refinancing rate eight times since early 2012 to boost lending. Data showed that total loans rose 3.5 per cent by the end of last June.

On the same day, the SBV pumped VND7 trillion on OMO to support liquidity to commercial banks, the local newswire NDHMoney.vn reported, citing data compiled by SSI Research.

On July 19, the monetary authority sold VND20 billion worth of 91-day treasury bills at 4.4 per cent and VND49 billion 182-day notes at 5.5 per cent while there were VND4.528 trillion debts falling due.

From March 15, 2012, the central bank issued in total VND342.179 trillion T-bills, of which VND275.216 trillion debts have matured.

The interbank interest rates kept rising on the last trading day of the week. Specifically, the rates rose to 4.6 per cent p.a. for overnight; 5.13 per cent p.a. for 1-week; 5.5 per cent p.a. for 1-month and 6.2 per cent for 3-month terms. — StoxPlus