Vietnam's two-year bonds fell, pushing the yield up by the most since September, on speculation banks pared holdings to replenish cash. The dong was steady on Thursday.
The interbank overnight deposit rate has surged 258 basis points, or 2.58 percentage points, to 4.29 percent this month, signaling funding availability declined, according to daily fixings by banks compiled by Bloomberg. Some lenders probably sold securities to raise cash ahead of year-end, said Nguyen Duy Phong, an analyst at Viet Capital Securities.
"Banks invested so much in bonds that they need to cash out to help maintain liquidity," said Ho Chi Minh City-based Phong. "The interbank rate indicates that the system needs a little bit of liquidity."
The yield on two-year bonds rose 10 basis points, or 0.10 percentage point, to 9.20 percent, according to a daily fixing rate from banks compiled by Bloomberg. That's the biggest jump since Sept. 27 and the highest level since Nov. 26. The yield on five-year bonds rose two basis points to 9.78 percent.
The dong was steady at 20,848 per dollar as of 2:01 p.m. in Hanoi Thursday, 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.