Vietnam central bank increases net capital injections

SBV adjusted the terms on the open market operations and made strong net injection of capital to support the liquidity for commercial banks.

According to aggregated data of a number of local institutional investors and foreign economic news, from December 31, 2011 to late January 2011, the State Bank continuously kept up pumping money to maintain the status of net capital injection, especially during the week ended on January 21 and January 28 with net injection of about US$1.18 billion and US$923.7 million respectively.

The move was believed to be a timely support of the State Bank for commercial banks to meet due capital demands and the payment during Tet holidays.

of the overnight rate was relatively stable and stayed around 13.5 percent per year.

According to leaders of some large commercial banks, the liquidity situation now remains stable. Meanwhile, smaller banks have had the advantage from the capital increase plan to ensure the legal capital. In general, after Tet, the pressure to withdraw the capital from banks has decreased; therefore, liquidity will likely continue to be improved.