SBV returns to net withdrawal as demand eases

This week, the SBV shifted back to net liquidity withdrawal via OMO as liquidity pressures in the banking system eased at the start of the year. On the interbank market, rates declined sharply across most maturities, while trading volume also dropped significantly, indicating that funding demand has cooled after the sharp tightening observed previously. On the FX front, USDVND continued to ease amid expectations of more accommodative Fed rate policies. In addition, year end remittance inflows and a consistent four-week streak of foreign net buying also contributed to the calmer exchange rate dynamics. As the economy enters a new phase with ambitious growth objectives, we expect the SBV to maintain a supportive stance to ensure smooth functioning of the banking system.