Vietnam's central bank increases repo term to aid liquidity

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Vietnam's central bank increased the term for one of its interest rates for the first time since January, seeking to ensure banks have adequate funds.

The State Bank of Vietnam lent VND2 trillion ($96 million) in open market operations for a term of 14 days, it said in an e-mail Monday. That's the first time since January 30 that the central bank raised the term to 14 days from seven days.

"This increase is designed to support liquidity in the banking system, especially small lenders," said Nguyen Tan Thang, the head of fixed-income research at Ho Chi Minh City Securities Corp. (HCM)

Vietnam is struggling to contain the fastest inflation in Asia while supporting economic growth. The economy is vulnerable partly due to undercapitalized banks, rising debt and deteriorating corporate profits, Credit Suisse Group AG said Aug. 29. The outlook for banks is negative due to falling profits and poor asset quality, Moody's Investors Service said Sept. 1.

The open-market operations rate, also known as the repurchase rate, remains at 14 percent, Monday's statement showed.

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