SBV continues its liquidity injections

This week, the SBV continued to significantly issue repo contracts as liquidity issues remain unresolved in the banking system. Specifically, interbank rates continued to climb across all tenors, with overnight rates surging from 4.25% to 5.18% by Friday. On the FX market, USDVND rebounded notably, driven by the DXY reaching its highest level this year. This development was supported by the Republican Party’s sweeping U.S. election victory and hawkish remarks from the Fed Chair, which dampened expectations of imminent rate cuts. Looking ahead, USDVND is expected to face pressure from a strengthening DXY and a potentially delayed Fed rate-cut timeline. However, we maintain a positive long-term outlook, supported by the SBV’s measures to stabilize the exchange rate. This optimism is further reinforced by a sizable trade surplus and anticipated year-end remittances, which are key factors contributing to stability.