Aug. 24 (Bloomberg) -- Vietnam’s overnight money-market rate more than doubled this week as banks hoarded cash to meet customer withdrawals after the co-founder of Asia Commercial Bank was arrested. Government bonds and the dong fell.
The overnight interbank deposit rate surged 4.1 percentage points since Aug. 17 to 6.80 percent, the highest level in more than four months and the biggest weekly climb since Bloomberg started compiling the data in 2009. The yield on benchmark five-year bonds jumped 21 basis points, or 0.21 percentage point, to 9.82 percent this week, according to a daily fixing rate from banks compiled by Bloomberg. The yield rose 12 basis points today to the highest level since July 30.
Nguyen Duc Kien, a co-founder of Vietnam’s fourth-biggest lender by market value, was arrested Aug. 20 for allegedly conducting “business illegally,” according to a central bank statement. Asia Commercial will withdraw 36 trillion dong ($1.7 billion) from the interbank market to meet its liabilities, Deputy Chief Executive Officer Nguyen Thanh Toai said yesterday.
“The rate in the money market is right up and that’s why investors have hesitated to put money into the bond market,” said Pham Phuong Lan, the Hanoi-based head of fixed-income and currency trading at the Bank for Investment & Development of Vietnam.
The dong traded at 20,875 per dollar as of 3:28 p.m. in Hanoi, compared with 20,725 yesterday and 20,845 a week ago, according to data compiled by Bloomberg. The State Bank of Vietnam set its reference rate at 20,828, unchanged since Dec. 26, according to its website. The currency is allowed to trade up to 1 percent on either side of the rate.
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