SBV pulls back liquidity as interbank rates drift

This week, the SBV halted its repo issuance, leading to a modest liquidity withdrawal as previous repo contracts matured, amid a continuing rise in exchange rates. The interbank rate curves shifted downward across all tenors, with a marked decline in the overnight and weekly tenors. In the FX market, the USDVND continued its notable increase, marking the fourth consecutive week of appreciation as the DXY extended further. This trend was driven by a robust U.S. labor market supporting a “soft landing” and heightened global economic instability due to conflicts in the Middle East, which have continued to boost the USD’s value over the past two weeks. The SBV’s actions are cautious, as managing exchange rates while supporting economic recovery has become increasingly challenging in this volatile environment.