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Vietnam Bonds Advance on Higher Demand From Banks; Dong Steady
Vietnam’s five-year bonds rose for a fourth day, pushing the yield to the lowest level in almost four weeks, as falling interbank lending rates boosted demand. The dong was unchanged.
The overnight interbank deposit rate touched a seven-week low of 1.47 percent on July 31 and has fallen more than 10 percentage points this year, according to data from banks compiled by Bloomberg. High levels of cash in the banking system have pushed down the rate, according to a July 23 research note from Bank for Investment & Development of Vietnam.
“It’s more profitable for banks to invest in bonds than to lend in the interbank market,” said Hoang Thanh Tam, head of the fixed-income department at Vietnam Maritime Commercial Joint-Stock Bank in Hanoi. “The overnight rates are at levels much lower than bond yields.”
The five-year yield declined two basis points, or 0.02 percentage point, to 9.75 percent, the lowest level since July 6, according to a daily fixing rate from banks compiled by Bloomberg.
The dong traded at 20,865 per dollar as of 3:08 p.m. in Hanoi, according to data compiled by Bloomberg. The central bank set its reference rate at 20,828, unchanged since Dec. 26, according to its website. The currency is allowed to trade as much as 1 percent on either side of the fixing.
Bloomberg
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