SBV withdraws liquidity ahead of Independence Day

This week, the SBV returned to a sizable net liquidity withdrawal as liquidity condition in the banking system turned soft with interbank rates, especially those on short-term tenors, falling sharply. On the FX market, USDVND edged lower as expectations for a Fed rate cut at the upcoming FOMC meeting firmed on recent data. However, we expect exchange rate pressures to persist in the near term, especially after the holiday as the Government provides support to citizens for Independence Day.