Vietnam’s bonds gained, driving down yields by the most in more than two weeks, on speculation banks have surplus cash to invest in debt. The dong was stable.
Vietnam’s money supply has risen 4.5 percent this year, according to a government statement distributed at a briefing in Hanoi on May 27. Bank lending fell in the first five months, Prime Minister Nguyen Tan Dung said on a radio broadcast yesterday, without giving a figure.
“Banks have a lot of abundant cash but they can’t lend out to companies for fear of high credit risks,” said Nguyen Tuan Phong, the Hanoi-based fixed-income manager at Bao Viet Fund Management Co., a unit of Vietnam’s biggest insurer. “So they use the funds to buy government bonds.”
Yields on five-year notes declined nine basis points, or 0.09 percentage point, to 9.58 percent, the biggest drop since May 10, according to a daily fixing from banks compiled by Bloomberg.
The overnight interbank deposit rate dropped five basis points to 1.56 percent, the lowest level since June 2009 when Bloomberg started compiling the data.
The dong traded at 20,870 per dollar as of 2:28 p.m. in Hanoi, compared with 20,862 yesterday, according to data compiled by Bloomberg. The central bank fixed the 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 rate.
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