Vietnam Central Bank Injects Nearly VND 50 Trillion in One Day Through FX Swaps

Nguyễn Linh Phương, deputy director of the Monetary Policy Department at the State Bank of Vietnam, said on November 11 that the bank had recently launched a six-month foreign exchange swap operation with an initial size of USD 2 billion. On November 9 alone, the operation supplied nearly VND 50 trillion to the banking system, helping credit institutions maintain dong liquidity at year-end and ahead of Lunar New Year.

The State Bank of Vietnam launched a six-month foreign exchange swap operation with an initial size of USD 2 billion.（VietVance）

Phương said that after the operation was announced, the six-month foreign exchange swap rate in the interbank market fell to a level comparable to the State Bank of Vietnam’s quoted rate. Swap rates for terms of three months or longer also trended downward. She said the measure had begun to help stabilize market expectations and create conditions for lower lending rates. The State Bank of Vietnam will continue to use open market operations, refinancing and foreign exchange swaps according to market conditions.

Trần Chí Thanh, deputy CEO of Vietnam International Bank (VIB), said the bank participated in the first round of six-month swaps. The longer term helps banks plan funding needs across year-end and Lunar New Year. He said reasonable swap costs can reduce the total cost of converting overseas funding into dong for domestic use. If the amount supplied is large enough, the operation could also ease upward pressure on domestic deposit rates.

On November 9, the foreign exchange swap operation supplied nearly VND 50 trillion to the banking system.（VietVance）

Vũ Minh Trường, deputy CEO of Vietnam Prosperity Joint Stock Commercial Bank (VPBank), said the six-month term helps banks plan liquidity. He said the 2.25% swap cost in this round was reasonable and would help lower funding costs, creating room to reduce lending rates.

Source: VietVance