Central bank’s money withdrawal 'normal' amid excess liquidity: experts

By Nguyen Thoan, Huong Dung
Sat, September 23, 2023 | 8:18 pm GMT+7

Cash withdrawal is a normal measure taken by the State Bank of Vietnam (SBV) when the banking system shows excess liquidity, said economists, referring to the central bank’s recent issuance of nearly VND10 trillion ($411 million) of treasury bills.

Dr. Can Van Luc, chief economist at state-controlled bank BIDV, said amid the system’s abundant liquidity, the SBV withdraws money to partially keep interbank interest rates at more appropriate levels, indirectly supporting the stabilization of exchange rates.

“This is a normal operation of the SBV, but whether it will continue to issue bills or not depends on liquidity among banks,” he emphasized.

The State Bank of Vietnam issued nearly VND10 trillion ($411 million) of treasury bills on September 21, 2023. Photo by The Investor/Trong Hieu.

The State Bank of Vietnam issued nearly VND10 trillion ($411 million) of treasury bills on September 21, 2023. Photo by The Investor/Trong Hieu.

Sharing the same opinion, Dr. Le Xuan Nghia, a member of the National Financial and Monetary Policy Advisory Council, said that commercial banks currently have excess working capital but cannot lend to customers.

The central bank’s money withdrawal mainly aims to remove difficulties for some commercial banks with a surplus of working capital which was mobilized at relatively high interest rates, he noted.

Affirming this is a normal activity for central banks, he added that $411 million would not have much of an impact on the entire market but could reduce pressure on exchange rates.

When the system's liquidity is in excess, the SBV’s net withdrawal should be considered in correlation with exchange rate developments, according to FiinGroup, a leading Vietnamese financial data provider.

This move shows that the central bank is willing to intervene to "cool down" exchange rates and is expecting to retain foreign cash flow lined up to be withdrawn or creating a boost for foreign cash flow waiting for disbursement, it added.

The SBV said on Thursday that it had issued nearly VND10 trillion ($411 million) of treasury bills via auction with the winning interest rate of 0.69% per year. The bills have a term of 28 days from September 21, with the interest rate paid once at the beginning of the period.

This was the first bill issuance by the SBV in more than six months (from March 10). Newly released data from the SBV showed that credit is still growing very slowly, reaching only 5.56% in the year to September 15, up slightly from a 5.33% increase at the end of August, while the target set for the year is 14%.

Vietnam’s credit reached about VND12,560 trillion ($522.14 billion) in the year to August 29, up only 5.33% from the end of last year, said standing Deputy Governor of the State Bank of Vietnam (SBV) Dao Minh Tu on September 7.

The figure was low compared to an increase of 9.87% in the same period last year. A major reason is economic difficulties persist, leading to low credit demand for business expansion and investment activities.

"The supply of credit to the economy has still faced difficulties as businesses cannot absorb capital and do not want to borrow money," Tu noted.

Comments (0)
  • Read More
Vietnam foreign ministry dismisses stories of tightening visa rules for foreigners

Vietnam foreign ministry dismisses stories of tightening visa rules for foreigners

Stories of Vietnam tightening up its visa policy for foreigners are “baseless,” the Ministry of Foreign Affairs' spokesperson Pham Thu Hang said Thursday.

Politics - Fri, November 22, 2024 | 11:29 am GMT+7

Thailand-invested food giant CP fined $31,000 for environmental violations

Thailand-invested food giant CP fined $31,000 for environmental violations

Vietnam’s southern province of Dong Nai has issued a fine of VND790 million ($31,080) to Thailand-invested C.P. Vietnam Corporation for violating environmental regulations.

Companies - Fri, November 22, 2024 | 10:48 am GMT+7

Vietnamese billionaire’s daughter spends $25 mln on Masan share purchases

Vietnamese billionaire’s daughter spends $25 mln on Masan share purchases

Nguyen Yen Linh, the daughter of chairman Nguyen Dang Quang of consumer goods giant Masan Group (HoSE: MSN), has purchased nearly 8.5 million MSN shares over the past three weeks, meeting 85% of her target.

Finance - Fri, November 22, 2024 | 10:27 am GMT+7

PYN Elite manager upbeat about Vietnam’s economy, stock market despite Trump uncertainty

PYN Elite manager upbeat about Vietnam’s economy, stock market despite Trump uncertainty

The Vietnamese economy will still fare well, and the local stock market will remain appealing despite the recent pullback following Donald Trump’s election win for a second term, said Petri Deryng, portfolio manager of Finland-based the PYN Elite fund.

Finance - Fri, November 22, 2024 | 8:25 am GMT+7

Central Vietnam province plans to build $2.4 bln LNG power plant from 2031

Central Vietnam province plans to build $2.4 bln LNG power plant from 2031

The 4,800-MW Chan May LNG power plant, with an investment of $2.4 billion, can be deployed in 2031-2035, according to Thua Thien Hue authorities.

Energy - Thu, November 21, 2024 | 10:41 pm GMT+7

Indonesia, France step up cooperation in economy, defence

Indonesia, France step up cooperation in economy, defence

Indonesian President Prabowo Subianto discussed economic and defence cooperation during a bilateral meeting on Tuesday with French President Emmanuel Macron on the sidelines of the G20 Summit in Rio de Janeiro, Brazil, Antara reported.

Southeast Asia - Thu, November 21, 2024 | 10:25 pm GMT+7

Thai economy to maintain upward momentum in 2025

Thai economy to maintain upward momentum in 2025

The National Economic and Social Development Council of Thailand (NESDC) expects the Thai economy to sustain its upward momentum in 2025 with a growth of 2.3-3.3% despite growing risks.

Southeast Asia - Thu, November 21, 2024 | 10:24 pm GMT+7

Former parliament chairman Vuong Dinh Hue warned for violations

Former parliament chairman Vuong Dinh Hue warned for violations

The Politburo, Vietnam's supreme decision making body, on Wednesday issued warnings to Vuong Dinh Hue, former Chairman of the National Assembly, and Nguyen Van The, former Minister of Transport, for violations while on duties.

Politics - Thu, November 21, 2024 | 10:10 pm GMT+7

Sumitomo insists on building LNG power plant in central Vietnam

Sumitomo insists on building LNG power plant in central Vietnam

Japanese trading house Sumitomo has been pushing for a liquefied natural gas (LNG)-fed power plant investment in Vietnam’s central province of Khanh Hoa.

Energy - Thu, November 21, 2024 | 8:53 pm GMT+7

Vietnam’s Vinhomes fulfils 67% of record buyback plan

Vietnam’s Vinhomes fulfils 67% of record buyback plan

Vinhomes, the housing development arm of conglomerate Vingroup, has purchased back 246.98 million shares, meeting 66.75% of the plan and accounting for 5.7% of the outstanding volume.

Finance - Thu, November 21, 2024 | 8:43 pm GMT+7

Vietnam high-speed railway should run beyond Hanoi, HCMC on either side: lawmakers

Vietnam high-speed railway should run beyond Hanoi, HCMC on either side: lawmakers

Vietnam’s mega North-South high-speed railway project should be redesigned and extended beyond Hanoi and Ho Chi Minh City as currently planned, several lawmakers have suggested.

Infrastructure - Thu, November 21, 2024 | 6:11 pm GMT+7

Vietnam-Malaysia relationship upgraded to comprehensive strategic partnership

Vietnam-Malaysia relationship upgraded to comprehensive strategic partnership

Vietnam and Malaysia have upgraded their relationship to a comprehensive strategic partnership, the highest level in the former’s diplomatic hierarchy.

Politics - Thu, November 21, 2024 | 5:21 pm GMT+7

Petrovietnam units sign LNG supply deal for trial run of Vietnam’s first LNG power plants

Petrovietnam units sign LNG supply deal for trial run of Vietnam’s first LNG power plants

PV Power and PV Gas, two units of state-owned Petrovietnam, have signed an LNG supply deal for trial operation of Nhon Trach 3 and Nhon Trach 4, Vietnam’s first LNG-to-power plants.

Energy - Thu, November 21, 2024 | 4:40 pm GMT+7

Sufficient first phase funds ensured for Vietnam’s new mega airport: transport minister

Sufficient first phase funds ensured for Vietnam’s new mega airport: transport minister

Minister of Transport Nguyen Van Thang affirmed Wednesday that funding would be secured for building the Long Thanh International Airport, set to become Vietnam’s biggest.

Infrastructure - Thu, November 21, 2024 | 3:53 pm GMT+7

Bamboo Capital wins kudos for transparent reports, good governance

Bamboo Capital wins kudos for transparent reports, good governance

Vietnamese private conglomerate Bamboo Capital Group has been honored as a Top 20 business with the Best Annual Report and the Best AGM Organization at the 2024 Vietnam Listed Company Awards (VLCA).

Bamboo Capital - Thu, November 21, 2024 | 3:37 pm GMT+7

VAFIE to organize workshop on amendments to horse racing, football betting rules

VAFIE to organize workshop on amendments to horse racing, football betting rules

The Vietnam’s Association of Foreign Invested Enterprises (VAFIE) and The Investor will organize a workshop on suggestions to amend the government’s Decree 06 on horse racing, greyhound racing and international football betting services.

Economy - Thu, November 21, 2024 | 2:38 pm GMT+7