FED stops raising interest rates: Opportunity to reduce lending rates?

SGGP June 16, 2023 07:01

After the US Federal Reserve (FED) kept the USD interest rate unchanged at 5%-5.25% at the end of its two-day regular monetary policy meeting that ended in the early morning of June 15, the market had mixed developments.

In the Vietnamese stock market trading session on June 15, in addition to receiving information from the FED, investors also traded cautiously on derivatives expiry. Liquidity decreased with a total trading value across the market of about VND 15,429 billion, much lower than the average of approximately VND 20,000 billion/session in many previous sessions. Stocks only fluctuated within a slight range, most of the trading time VN-Index hovered around the reference level. Real estate stocks were differentiated, but many stocks still fell deeply, such as QCG hitting the floor for the second consecutive session; LGL and TDH also hit the floor. At the end of the trading session, VN Index fell 0.45 points to 1,116.97 points; HNX-Index increased slightly by 0.62 points to 229.53 points.

Trong khi giá vàng thế giới lao dốc thì giá vàng SJC trong nước vẫn giao dịch với giá bán ra trên 67 triệu đồng/lượng. Vào khoảng 16 giờ 30 ngày 15-6, tại TPHCM, Công ty PNJ niêm yết vàng SJC ở mức 66,5 triệu đồng/lượng mua vào và 67,1 triệu đồng/lượng bán ra, tăng 50.000 đồng chiều mua và 150.000 đồng chiều bán so với hôm trước.

On June 15, the State Bank announced the central USD exchange rate at 23,704 VND/USD, an increase of 4 VND compared to the previous day. In line with the increase in the central exchange rate, the USD price at commercial banks during the day was also listed to increase by 30-35 VND/USD.

Commenting on the FED's move to keep interest rates unchanged after 10 consecutive increases, Mr. Huynh Minh Tuan, Business Director of VNDirect Securities Company, said that the move to keep rates unchanged this time is more moderate than the previous times and the determination to tighten is no longer evident. "For the Vietnamese stock market, in the short term, it still reflects domestic stories more than policy factors from the FED," Mr. Tuan commented.

Dr. Can Van Luc, member of the National Financial and Monetary Policy Advisory Council, said that the FED's decision to keep interest rates unchanged after a series of continuous increases in recent months can be seen as a way to test the market's reaction as well as the impact on the inflation rate in the US. For Vietnam, the FED's temporary suspension of interest rate increases will also help reduce pressure on interest rate increases. The State Bank's exchange rate management will be much more lenient than at the end of last year or the beginning of this year, while also increasing room to reduce domestic operating interest rates.

Currently, when considering the domestic context along with the FED's move, it shows that the State Bank still has room to reduce the operating interest rate. Vietnam can adjust the interest rate down by 0.25-0.5 percentage points of the operating interest rate, which will create a basis for the market to reduce the mobilization interest rate and lending interest rate.

Source