By Van Nguyen
Feb. 10 (Bloomberg) -- Vietnamese bonds rose on speculation demand from banks for government debt increased because of a drop in interbank rates. The dong declined.
The average overnight interest rate fell 30 basis points to 9.37 percent last week, the State Bank of Vietnam said in a statement yesterday. A basis point is 0.01 percentage point.
“Demand for bonds from large Vietnamese banks has increased because they are benefiting from cheaper borrowing costs in the interbank market,” said Hanoi-based Tran Xuan Tung of the bond investment department at PetroVietnam Finance Co., the biggest publicly traded company on the Ho Chi Minh City Stock Exchange.
The yield on the five-year note dropped five basis points to 12.40 percent as of 5 p.m. local time, according to a daily fixing price from banks compiled by Bloomberg. Benchmark bond yields yesterday rose to the highest since Nov. 14, 2008 on concern inflation will accelerate.
Vietnam’s central bank has injected more than 215 trillion dong ($11.6 billion) into the monetary market by buying back government bonds and bills via open-market operations since the start of the year, figures from the State Bank of Vietnam show.
The monetary policy maker is taking measures “to stabilize the money market, and ensure sufficient funds in the banking system,” the State Bank said in a statement released at a press briefing last week.
The dong weakened by 0.2 percent to 18,479 against the dollar from 18,440 yesterday, according to prices from banks compiled by Bloomberg. It touched a record low of 18,500 on Nov. 26. The State Bank allows the currency to trade as much as 3 percent on either side of a rate that it sets each day. Today’s reference rate was 17,941, unchanged since Dec. 10.
The currency traded at about 19,175 per dollar at money changers in Ho Chi Minh City, from 19,215 yesterday, according to a telephone directory information service run by state-owned Vietnam Posts & Telecommunications.
--With assistance from Nguyen Dieu Tu Uyen in Hanoi. Editor: Beth Thomas
To contact the reporter on this story: Van Nguyen in Hanoi at 84-4-3936 6724 or vnguyen23@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at +852-2977-6608 or shendry@bloomberg.net
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