The move comes in response to a slowdown in lending observed earlier this year, prompting the central bank to step up the draining of money from the system.

During an auction held on March 15, the SBV sold VND15 trillion worth of 28-day Treasury bills to 11 out of 12 participating entities, with coupons slightly declining to 1.38% per annum.

In the four preceding sessions, the SBV withdrew VND60 trillion from the system through 28-day Treasury bills at a coupon of 1.4% per year. This cumulative action resulted in total net withdrawals of VND75 trillion, with no indication of any counterbalancing reverse repo activities.

The central bank’s acts are aimed at supporting the exchange rate, which has recently come under pressure due to excess short-term Vietnam dong liquidity within the banking system.

Interbank interest rates have surged following the SBV’s withdrawal of Vietnamese dong funds through bill issuance.

According to the latest data released by the SBV, the average overnight interbank dong interest rate spiked to 1.47% on March 13, up from 0.76% on March 11 and 0.77% at the end of the previous week.