Vietnam bonds gain on central bank's cash injection; dong steady

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Vietnam's five-year bonds had the best week since September on optimism the central bank's cash injections into the financial system will provide banks with more funds to buy debt. The dong was steady.

The State Bank of Vietnam added net funds of about VND8.48 trillion ($404 million) this week, up from VND4.25 trillion last week, according to Nguyen Duy Phong, a Ho Chi Minh City-based analyst at ACB Securities Inc. Yields on debt due 2016 on Friday dropped to the lowest level since Nov. 3.

"The fund injection helped relieve banks' liquidity issue" and bolstered demand for bonds, said Phong.

Yields on five-year government debt fell two basis points, or 0.02 percentage point, to 12.43 percent, according to a daily fixing from banks compiled by Bloomberg. That took the week's decline to five basis points, the most since the five-day period ended Sept. 30.

The dong remained unchanged at 21,009 per dollar as of 3:03 p.m. on Friday in Hanoi, according to data compiled by Bloomberg. The central bank set the reference rate at 20,803, unchanged since Oct. 28, its website showed. The currency is allowed to trade up to 1 percent on either side of the official rate.

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