SBV conducts aggressive liquidity injections ahead of Lunar New Year

This week, the SBV maintained strong net liquidity injections as funding demand intensified ahead of the Lunar New Year holiday. On the interbank market, rates heated up amid surging demand, with overnight rates spiking to around 20% early in the week before easing to above 10% by Friday. On the FX front, USDVND edged higher, mainly reflecting sustained net foreign selling on the stock market, while the US dollar remained under pressure amid expectations surrounding the Fed’s policy outlook. Looking ahead, we expect interbank conditions to remain volatile in the coming weeks ahead of the holiday, suggesting that the SBV is likely to continue supporting the banking system via OMO.