Liquidity in the banking system has been positive as interest rates in the inter-bank market dropped for the fifth consecutive week.

Reports from the Bao Viet Securities Company showed that overnight and one-month rates slid by 43 percentage points to 2.27 per cent and 2.47 per cent in the week ending June 2.

During the week, the central bank made a net withdrawal of VND499 billion (US$21.89 million) via the open market operations.

Thanks to the good liquidity, demands for loans in the inter-bank markets declined sharply.

Nguyễn Đức Hùng Linh, analysis director of the Saigon Securities Incorporation, said that the liquidity has been improved significantly, contributing to reducing interest rates.

Interest rates for dong short-term deposits quoted at commercial banks have inched down by roughly 10 percentage points, Linh said.

However, he said, the rates for longer term deposits have been unchanged as banks’ demand for the loans has remained high to meet the central bank’s regulations on capital adequacy ratio. — VNS