HANOI, Oct 7 (Reuters) - Vietnam stocks fell sharply on Friday to the lowest level seen since early 2021, as investors reacted to a rise in banks' interest rates and weak global sentiment.
The benchmark fell as much as 4% on Friday to 1,031, the lowest since January 2021. The index has fallen 31% so far this year.
Traders and analysts said money is being pulled out of the market as local banks are raising their deposit interest rates, adding that foreign investors have been net sellers recently following U.S. Federal Reserve rate hikes.
"Domestic investors have reacted to the weak global sentiment (war, recession, inflation) and have been selling, or forced to sell due to margin call," said Craig Martin, executive chairman of Vietnam-focused fund manager Dynam Capital.
The overnight electronic interbank rate has exceed 8.4% a year, the highest since 2012, according to data from the State Bank of Vietnam, the country's central bank.
increase in its policy rates
(Reporting by Khanh Vu, Tom Westbrook and Phuong Nguyen; Editing by Kanupriya Kapoor)
