At the transaction session on January 13, SBV, through 14-day treasury bills, withdrew VND20.5 trillion from circulation via open market operations. The interest rate of the bills was 6 percent per annum.

On January 12, SBV withdrew VND21.5 trillion after withdrawing VND24.5 trillion on Jan 11, VND18.5 trillion on Jan 10 and VND25 trillion on Jan 9. These were 7-day bills with interest rates of 5.5-6 percent.

As such, from Jan 9-13, SBV withdrew VND110 trillion from the banking system.

However, if noting that the matured bills were worth VND121.75 trillion, the central bank’s net injection would be VND11.75 trillion.

Also, in the week, SBV maintained the injection of money via repo contracts with value of VND39.667 trillion and recognized five due repo (sales and repurchase agreements) contracts, worth VND27.998 trillion.

As such, from Jan 9 to Jan 13, SBV’s net injection was VND23.428 trillion.

Last week, SBV made a net withdrawal of VND97.267 trillion from the market. Meanwhile, in the last week of 2022 (December 26-30), its net withdrawal was over VND102.663 trillion.

The central bank made a net injection again when the overnight interest rate in the interbank market increased sharply in the first two weeks of the year, to over 5 percent per annum on Jan 3 and 5.95 percent on Jan 12.

USD price down, supply up

The dollar price continued to drop. The selling prices quoted by some commercial banks have become even lower than SBV’s buying prices.

Vietcombank, for example, quoted the price of VND23,290 per dollar, while SBV’s Exchange was VND23,450 per dollar.

This caught the attention of analysts as this allowed SBV to increase the purchase of dollars after having to sell dollars to ease the exchange rate in October and November 2022. 

The move led to a sharp fall in forex reserves, from $110 billion to $90 billion in early 2023 as estimated by VNDirect Securities.

According to the Saigon Securities Incorporated (SSI), foreign currency supply is profuse in the first months of the year thanks to overseas remittances and this is the time for SBV to buy foreign currencies to increase forex reserve and provide VND liquidity in pre-Tet days.

Duy Anh