Vietnam's benchmark five-year bonds dropped, with yields rising the most in more than two weeks, on speculation banks don't have surplus cash to invest in the securities. The dong gained.
Deposits at lenders dropped 1.09 percent as of April 21 from the previous month, the country's central bank said in a May 11 statement on its website.
"Commercial banks are facing a big issue in terms of liquidity and they don't have cash to buy government bonds," said Nguyen Duy Phong, an analyst at ACB Securities Inc. in Ho Chi Minh City.
Yields rose 16 basis points to 12.76 percent, the most since April 25, according to a daily fixing from banks compiled by Bloomberg.
The dong gained 0.1 percent Friday and this week to 20,570 per dollar as of 1:58 p.m. in Hanoi, according to data compiled by Bloomberg.
The State Bank of Vietnam fixed the currency's reference rate at 20,688, compared with 20,693 yesterday, its website showed. The currency is allowed to trade up to 1 percent on either side of the rate.