Vietnam’s bonds rise as new regulations boost bank liquidity

Vietnam’s benchmark bonds rose as improved liquidity boosted banks’ demand for the government debt. The dong declined.

Bank deposits increased 1.40 percent this year through May 19, the State Bank of Vietnam said in a statement on its website today. The central bank lowered the cap for dollar-deposits for individuals to 2 percent from 3 percent, and cut the limit for institutions to 0.5 percent from 1 percent, from June 1. The move has resulted in people switching to dong deposits, which have interest rates of about 14 percent, said Vu Anh Duc, a fixed-income dealer at Vietnam Bank for Industry and Trade.

“Banks have more funds after some recent moves by the central bank,” Hanoi-based Duc said.

The yield on the benchmark five-year notes dropped four basis points, or 0.04 percentage point, to 12.83 percent, according to a daily fixing price from banks compiled by Bloomberg. The dong weakened 0.1 percent to 20,570 per dollar as of 5:01 p.m. in Hanoi, according to prices from banks compiled by Bloomberg.

The central bank set the dong’s daily reference rate at 20,628, compared with 20,633 at the end of last week. The currency is allowed to fluctuate by as much as 1 percent on either side of the fixing.

The monetary authority said Vietnam’s money supply rose 1.57 percent this year through May 19, in its statement on June 6. (Bloomberg)

Posted by VBN on Jun 7 2011. Filed under Banking-Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry