Aug. 29 (Bloomberg) -- Vietnam’s five-year bonds dropped, driving the yield to the highest level in almost five months, on speculation banks are paring holdings to raise more cash for lending. The dong rose.
The government is targeting loan growth of 12 percent this year. Credit grew 5.4 percent as of Aug. 20 from the end of last year, Thanh Nien newspaper reported Aug. 27.
“Banks are selling bonds to hold cash in preparation for faster credit growth,” said Pham Tri Hieu, deputy head of the money-market trading desk at Nam Viet Commercial Joint-Stock Bank in Ho Chi Minh City.
The five-year yield rose eight basis points, or 0.08 percentage point, to 8.65 percent, the highest since April 5, according to a daily fixing from banks compiled by Bloomberg.
The dong rose 0.1 percent to 21,155 per dollar as of 4:15 p.m. in Hanoi, according to data compiled by Bloomberg. The central bank set its reference rate at 21,036, unchanged since June 28, according to its website. The currency is allowed to trade as much as 1 percent on either side of the fixing.
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