Commercial banks now cashed up

Commercial bank liquidity has improved dramatically since the State Bank of Vietnam injected a heavy volume of capital at reasonable interest rates into the open market in July.

The volume of valuable paper trading remained at about VND32-56 trillion (US$1.64-2.87 billion) from July to August.

It even climbed to VND110 trillion ($5.64 billion) in late June.

But the volume had fallen seven fold to VND7.72 trillion ($395.79 million) as of August 20.

"The reduction was very surprising," Thang Long Securities said in a report issued last week.

"It reflects the improvement in bank liquidity."

An Binh Bank's deputy general director Pham Quoc Thanh said: "A flexible monetary policy will help bank liquidity remain healthy until the year-end. Supply and demand will be balanced and interest rates will be stable."

In order to boost lending, banks like ABBank, Lien Viet Bank, HD Bank and Asia Commercial Bank are reducing borrowing costs to 10.7-11.7 percent per year for manufacturers, exporters, small and medium sized enterprises.

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