Interest-rate and exchange-rate dynamics and actions by the State Bank of Vietnam

Dragon Việt Securities (VDSC) said that by the end of 2025, credit growth rose 19.01% and mobilization growth (including time deposits and bonds) reached 15.42%. VDSC noted that the credit–mobilization gap has persisted since 2024, meaning funds from the State Budget (KBNN) have become an important source to help balance liquidity, in a context where external money supply (FDI, FPI, remittances, etc.) did not grow as expected.

Liquidity structure at end-2025 and the role of KBNN

At year-end 2025, the balance of State Budget deposits (TGKB) at four state-owned banks was around 400–500 trillion VND, nearly reaching the limit set for KBNN tendering deposits in the budget cycle. VDSC said this liquidity exceeded even non-term deposits of commercial banks at the State Bank of Vietnam (Citad), which were around 400 trillion VND. The implication, VDSC said, is that most of the money circulating in the system to ensure liquidity mainly comes from KBNN.

Market deposit rates and exchange-rate pressure

VDSC said the situation leads to two consequences.

First, the 1-month market deposit rate remains on an upward trend. While KBNN deposits can offset part of liquidity in volume, they cannot fully offset it in terms of liquidity ratios and the structure of funds. As a result, it takes time for the capital to be absorbed before being injected into the 1-month market, keeping the 1-month deposit rate higher.

Second, the USD/VND exchange rate is likely to maintain an upward trend this year. VDSC attributed this to a mismatch between domestic and external money supply. High credit growth expands the VND money supply quickly, while USD supplies from outside (FDI, FPI, remittances, etc.) do not increase correspondingly, leaving relatively more VND than USD in the system. VDSC said that high 1-month market rates may slow the pace of exchange-rate increases, but are unlikely to reverse the trend while credit expansion remains strong despite significant rate hikes.

Middle East conflict and additional macro headwinds

VDSC also highlighted that the escalation of the Middle East conflict has had negative macro implications for inflation, growth, and exchange-rate–interest-rate management. For Vietnam, VDSC said the impact includes disruptions to fuel supply, which pushed domestic fuel prices higher—at times, RON95-III surged to about 30,690 VND per liter—raising demand for foreign currency to import fuel and widening the trade deficit, thereby increasing pressure on the exchange rate. VDSC added that the Fed’s caution about inflation and its delay in rate cuts could further pressure the State Bank of Vietnam’s (SBV) exchange-rate management.

SBV liquidity management and OMO withdrawal

Against this backdrop, SBV actively regulated liquidity in the open market. Over four consecutive weeks (from February 23 to March 20), net liquidity withdrawal via OMO reached more than 239.849 trillion VND. VDSC said this shows policymakers are pulling excess liquidity after a previously strong injection. The end-March outstanding OMO balance stood at about 243.047 trillion VND, much lower than the peak above 480 trillion VND earlier.

At the same time, SBV used a USD forward sale with a 180-day tenor, non-cancellable, to help stabilize the exchange rate.

Funding costs and swap-rate dynamics

VDSC said the widening gap between mobilization and credit continues to push up funding costs. It noted that USD–VND swap rates have risen to near-peaking levels, and in some tenors under one month, have surpassed the 2022 liquidity crunch.

VDSC’s assessment

VDSC argued that maintaining a positive swap position can help dampen the exchange-rate rise, but would add pressure to the deposit-rate structure. It also said expectations that foreign currency inflows would stabilize the exchange rate and reduce capital costs—through upgrading the stock market or becoming an international financial center—should be viewed with greater caution.