People's deposits in banks continue to increase despite low interest rates
As of the end of July 2023, according to statistics from the State Bank of Vietnam, the total means of payment of the economy reached more than 14.64 million billion VND, an increase of 2.91% compared to the end of 2022.
Also at the end of July 2023, statistics showed that the amount of people's deposits in the banking system increased by about 8.93% compared to the beginning of the year, reaching 6.4 million billion VND.
People's deposits in banks continue to increase despite low savings interest rates (Photo TL)
In contrast, deposits from economic organizations flowing into the banking system only reached VND5.9 million billion, down about 0.74% compared to the beginning of the year.
This development is contrary to the predictions of many economic experts when the deposit interest rate level is still maintained at a low level. Since the beginning of the year, the State Bank has been maintaining the deposit interest rate level at a low level to create a basis for banks to reduce costs, using this as a motivation to strive to lower lending interest rates to support businesses and people to recover production and business.
However, as the general economic situation has not shown many clear signs of recovery, people's cash flow continues to flow into safe channels such as savings despite low interest rates.
State Bank withdraws nearly 70,000 billion through credit bills in just 1 week
Forecasting interest rates in the coming time, many experts believe that interest rates may increase again due to the State Bank's net money withdrawal.
Specifically, in 5 trading sessions on September 21, 22, 25, 26 and 27, the State Bank of Vietnam (SBV) withdrew a total of nearly 70,000 billion VND from the system through the issuance of treasury bills.
Starting from September 21, the State Bank of Vietnam issued VND9,995 billion worth of 28-day treasury bills with an interest rate of 0.69%. On September 22 and 25, the State Bank of Vietnam continued to issue a total of VND20,000 billion worth of 28-day treasury bills with winning interest rates of 0.5% and 0.49%, respectively.
On September 26, the State Bank continued to issue VND20,000 billion worth of treasury bills with a term of 28 days and an interest rate of 0.58%. And on September 27, the State Bank continued to bid for VND20,000 billion of treasury bills with a winning interest rate of 0.65% and a term of 28 days.
The State Bank of Vietnam's use of the treasury bill issuance channel to withdraw nearly VND70,000 billion from the system is considered a move to stabilize the USD exchange rate in the context of this currency's strong appreciation in recent times.
Maybank Securities (MBKE) forecasts that the SBV will try to reduce exchange rate pressure to a target of approximately 3% in 2023. The net withdrawal of money from the system comes from observing that the system's liquidity is in excess.
In addition, slow credit growth during the year, reaching only 5.7% in mid-September while the annual target is 14-15%, is also the reason why the State Bank of Vietnam has stepped up the issuance of credit notes.
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