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Vietnam 5-Year Bonds Fall as Interbank Rate Climbs; Dong Steady

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Nov. 6 (Bloomberg) -- Vietnam’s five-year bonds fell for a second day on speculation banks will pare holdings to replenish cash as money-market rates rose to the highest level in more than a week. The dong was steady.

The overnight interbank deposit rate rose 25 basis points to 2.75 percent after the chairman of Saigon Thuong Tin Commercial Joint Stock Bank, the country’s fourth-largest listed lender by market value, was questioned by police and resigned last week. The rate surged as high as 6.8 percent in August after the arrest of the co-founder of Asia Commercial Bank triggered deposit withdrawals.

“Banks may be a bit more conservative and want to hold a bit more cash given recent incidents,” said Nguyen Duc Hai, a Ho Chi Minh City-based portfolio manager at Manulife Asset Management. “Toward the end of the year, bond yields may go up a little bit due to liquidity needs.”

The yield on benchmark five-year bonds rose one basis point, or 0.01 percentage point, to 10.11 percent, according to a daily fixing rate from banks compiled by Bloomberg. The overnight interbank rate has added 33 basis points this week, according to data from banks compiled by Bloomberg.

Vietnam’s central bank Governor Nguyen Van Binh said Oct. 7 that the monetary authority will crack down on violations stemming from small groups of shareholders who control Vietnamese banks, calling them the “biggest obstacle” to reforming the financial system.

The dong traded at 20,848 per dollar as of 4:19 p.m. in Hanoi, unchanged from yesterday, 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.

To contact the reporter on this story: Nick Heath in Hanoi at nheath2@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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