Vietnam's five-year bonds rose, pushing the yield to the lowest level in two months, on speculation banks will boost purchases as a central bank ruling on loans frees up cash for investment. The dong advanced.
Commercial banks must limit lending to "non-production businesses" such as those investing in the stock and property markets to 22 percent of loans by June 30 and to 16 percent by the end of the year, the State Bank of Vietnam said in March. There was no cap on loans earlier.
"Demand at banks is very high now since they have abundant cash," said Luu Hai Yen, a Hanoi-based analyst at Thang Long Securities Joint-Stock Co. "Having good liquidity, banks have been returning to the bond market."
Five-year bond yields fell eight basis points to 12.42 percent, the lowest level since April 22, according to a daily fixing from banks compiled by Bloomberg. A basis point is 0.01 percentage point.
The dong rose 0.1 percent to 20,583 per dollar as of 3:07 p.m. in Hanoi, compared with 20,610 yesterday, according to prices from banks compiled by Bloomberg.
The central bank set the reference rate at 20,618 Wednesday, unchanged since June 10, its website showed. The currency is allowed to trade up to 1 percent on either side of the official rate.