Continuously issuing treasury bills to attract money, has the State Bank reversed its monetary policy?

ANTD.VN - In the last 6 sessions, the State Bank has continuously issued treasury bills, attracting a total of 90,000 billion VND from banks. Is this a move to reverse and tighten monetary policy by the operator?

On September 28, the State Bank continued to withdraw nearly VND20,000 billion through treasury bill bidding. This was the 6th consecutive session that the operator offered treasury bills, raising the amount withdrawn from the interbank market to VND90,000 billion.

The bills issued in these rounds all have a term of 28 days and are offered for sale by interest rate bidding.

Previously, the last time the operator withdrew money through the treasury bill channel was in February this year with a total withdrawal scale of nearly 400,000 billion VND in 1 month.

Assessing the operator's continuous move to withdraw money, comments say that this is to adjust short-term liquidity status, not meaning that the State Bank will tighten monetary policy.

According to the analysis department of SSI Securities Company (SSI Research), the issuance of treasury bills is a common activity to adjust the short-term liquidity status of the system. This move does not mean that the State Bank will reverse its monetary policy.

Thanh khoản hệ thống dư thừa là nguyên nhân NHNN liên tục phát hành tín phiếu hút tiền về ảnh 1

Excess system liquidity is the reason why the State Bank continuously issues credit notes to withdraw money.

In fact, according to experts, the issuance of treasury bills can be considered positive, instead of the State Bank choosing to sell foreign currency from foreign exchange reserves. Through this operation, the management agency can assess the abundance of liquidity and adjust interest rates on the interbank market to balance exchange rate pressure.

According to the analysis team, concerns about policy reversal are quite understandable as last June, the State Bank also issued treasury bills on the open market channel, with a total issuance volume of nearly VND660,000 billion.

However, the current situation has many differences. The first difference comes from the bidding mechanism. Last year's T-bill issuance was a volume auction (and then converted to an interest rate auction), while the interest rate auction has been used for the past 5 days.

The issuance interest rate is almost the same as last year (longer term), but the nature is relatively different.

Specifically, liquidity at banks is abundant, the cause of this problem this year is much different from last year.

In 2022, the main reason was that credit growth hit the ceiling limit from mid-year, while in 2023, the slow credit growth was due to slowing economic growth.

An important difference is that the SBV chose to issue treasury bills as an option starting in 2023, instead of selling foreign exchange reserves as in 2022, to limit long-term impacts on banking system liquidity.

Regarding exchange rates, unlike last year, the level of exchange rate fluctuations in the banking market and the black market shows that the supply-demand gap is leaning more towards the banking market. This is most likely due to exchange rate speculation activities from commercial banks.

"The foreign currency position in the system has not yet faced too much pressure thanks to the abundant foreign currency supply. Another positive point is that the SBV's position is relatively different from the same period last year," the report said.

Second, the State Bank has issued treasury bills at relatively low interest rates and the interbank interest rate has not changed significantly, showing that liquidity in the market 2 is very abundant. Assessing the excess liquidity of the banking system can also help the management agency have a more comprehensive view.

In the first half of the year, the State Bank of Vietnam bought 6 billion USD to supplement foreign exchange sources, equivalent to 130,000 billion VND injected into the system's liquidity. Therefore, the analysis team believes that the issuance of treasury bills at this time could be the initial step to check liquidity and have assessments for appropriate interest rates in market 2 to minimize the impact on the interest rate level of market 1.

Also assessing the move to issue treasury bills by the operator, Dragon Viet Securities (VDSC) said that currently, with the USD-VND interest rate gap in the interbank market currently at 4-5 percentage points for terms under 1 month, along with the latest expectations about the Fed's monetary policy, it will continue to increase carry trade activities.

Therefore, the SBV's action of issuing treasury bills right after the Fed's meeting results is also a move to reduce the impact of this activity on exchange rate pressure.

In the coming time, the analysis team believes that the State Bank may continue to issue credit notes, but this does not mean a reversal in monetary policy because money supply regulation is timely and flexible. At the same time, the effectiveness of intervention on exchange rate pressure also depends on many factors, most importantly the trend of the USD index.

Maybank Securities (MBKE) also commented that the State Bank's consideration of withdrawing money from the current system is a measure to reduce exchange rate pressure, bringing it back to the target level (+/- 3% for this year). In August - September, the exchange rate increased rapidly and showed signs of exceeding the target threshold (over 3%).

According to Maybank, this is a carefully calculated move based on observing the system's liquidity (which is currently in excess) and a wise move (there is no need to use foreign exchange selling tools like last year).

MayBank believes that the State Bank is carefully calculating the amount of money withdrawn through treasury bills to ensure that the amount is sufficient to achieve the goals of increasing interest rates in the interbank market, thereby reducing pressure on exchange rates; not causing disruptions in liquidity for the entire economy; and ensuring that the real interest rate of the economy (lending interest rate) will continue to decrease.

Source link