Hanoi (VNA) – The increasing inflow ofremittances ahead of the Lunar New Year has replenished the liquidity of thebanking system, thus resulting in a steep fall in the interbank interest ratesin January, according to insiders.

Experts from Bao Viet Securities Joint Stock Company (BVSC) said the State Bankof Vietnam (SBV)’s net purchase of foreign currencies was around 6 billion USDin the last two months of 2019, increasing the nation’s foreign exchangereserves to approximately 79 billion USD.

They held that a plentiful supply of money has driven interest rates down aheadof the biggest annual holiday.
Statistics show that during January 6-10, the interbankinterest rates sharply declined on all terms. The overnight rate was 0.94percent per annum, and one-week rate was 1.46 percent per annum, a fall of 3.06percent and 2.74 percent, respectively, as compared to those recorded duringDecember 2-6.

Analysts from the MB Securities Company (MBS) forecast liquidity of the bankingsystem will be positive in 2020 as more foreign direct investment will run intothe country that has favourable investment policies and attractive labour costsas well as various benefits from the US – China trade war.

“We believe that liquidity of the banking system will be plentiful in 2020;therefore, the interest rates will not be affected by external factors”, aninsider said.

According to BVSC’s latest report, interest rates will be stable in 2020;however, they are hard to fall further in the next few months since theinflation rate is said to shoot up in the first half of 2020, driven by soaringpork and fuel prices./.