The State Bank of Viet Nam (SBV) net injected more than VND47.5 trillion (US$2 billion) into the open market operation (OMO) last week to support the liquidity of the banking system amid rising capital demands at the end of the year.

According to the latest report from the Saigon Securities Company, the injection was foreseeable as the SBV also pumped a large amount of money to support the liquidity of commercial banks at the end of 2016 and 2017, when the demand for cash increased sharply in the weeks ahead of Tet (Lunar New Year) - the country’s biggest holiday.

The SBV’s decision to continuously buy a large amount of US dollars in the past week also supported the supply of Vietnamese dong.

The good liquidity helped overnight interest rate of dong loans in the inter-bank market last week inch down to 4 per cent from 4.2 per cent in the previous week. One-week and two-week interest rates also dropped by 15 basis points to 4.3 per cent and 4.5 per cent, respectively.

Commercial banks also kept their interest rates of dong deposits steady, staying at 6.8-8 per cent per year for 12-13 month terms.

According to SSI analysts, the net injection of the SBV will ensure the good liquidity of the banking system during the peak week before Tet so interest rates will be stable at the current level before inching down in the weeks after Tet. — VNS