Bonds rise on higher demand from banks; dong weakens

Vietnam’s government bonds advanced on speculation demand has been bolstered because of an increase in the amount of cash available at banks. The dong weakened.

Lenders are recalling loans to meet a central bank-imposed lending cap ahead of a June 30 deadline, Phap Luat HCM City newspaper reported on its website, citing Le Hoang Chau, chair of HCM City’s property association.

“Banks’ appetite for bonds has risen” due to the availability of funds increasing recently, said Nguyen Thi Ngoc Anh, the HCM City-based head of fixed-income trading at Asia Commercial Bank. “Recent drops in interest rates in the interbank market reflect the funding improvement,” she said.

The yield on the benchmark five-year notes fell six basis points, or 0.06 percentage point, to 12.54 percent, according to a daily fixing from banks compiled by Bloomberg.

The overnight interbank deposit rate fell 12 basis points to 12.44 percent, according to data compiled by Bloomberg. Lending rates in the interbank market have been falling with overnight rates at 13 percent and one-week rates at 15 percent, the State Bank of Vietnam said in a statement on its website on June 23.

The dong weakened 0.1 percent to 20,596 per dollar as of 4:41 p.m. in Hanoi, according to prices from banks compiled by Bloomberg. The State Bank of Vietnam set its reference rate at 20,618 today, unchanged from June 13, according to its website. The currency is allowed to fluctuate by as much as 1 percent on either side of that rate.

 

Category: Finance