SBV withdraws liquidity amid diverging interbank rates

In 9W26, the SBV shifted to a substantial net liquidity withdrawal to absorb the excess funds returning to the banking system after the heavy net injections prior to the Lunar New Year. On the interbank market, rates showed a clear divergence as the overnight rate declined due to abundant immediate liquidity, while longer term rates rose as banks prepared for potential tightening once pre Tet repo contracts begin to mature. On the FX front, USDVND ticked up despite the slight decline in the US dollar which coincided with sustained foreign selling pressure on the HoSE, which exerted upward pressure on the exchange rate.