Vietnam bonds drop to lowest in June on interbank rates

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Vietnam's five-year bonds fell for a fifth day on Monday, pushing the yield to the highest level this month, on speculation an increase in interbank rates is damping demand for government securities. The dong was steady.

The overnight interbank deposit rate rose for an eighth day, adding seven basis points to 4.47 percent, according to data from banks compiled by Bloomberg. It has surged 3.02 percentage points in June.

"The rebound in interest rates on the interbank market raises the risk of holding long-term bonds," Nguyen Duy Phong, a Ho Chi Minh City-based analyst at Viet Capital Securities Co., wrote in a research note Monday.

The yield on the five-year bonds increased two basis points, or 0.02 percentage point, to 9.63 percent, according to a daily fixing rate from banks compiled by Bloomberg. That's the highest level since May 30.

The dong was little changed at 20,965 per dollar as of 2:10 p.m. Monday in Hanoi, compared with 20,958 on June 15, 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 as much as 1 percent on either side of the rate.

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