Vietnam's one-year bonds fell, pushing the yield to a three-week high, on speculation banks are stockpiling cash for the Lunar New Year holiday. The dong was little changed.
The overnight interbank deposit rate rose 50 basis points, or 0.50 percentage point, to 3 percent today, according to daily fixings by banks compiled by Bloomberg, signaling increased demand for funding. Markets are shut in Vietnam all of next week.
"Bond yields are affected mostly by the money-market rate, which is going up because of the pressure of the Lunar New Year holiday," said Tran Kieu Hung, a Hanoi-based fixed-income trader at Bank for Investment & Development of Vietnam. "Many banks need to prepare."
The yield on one-year bonds increased six basis points to 8.1 percent, according to a daily fixing from banks compiled by Bloomberg. That's the highest level since Jan. 14. Borrowing costs on five-year notes climbed two basis points to 9.08 percent.
The dong traded at 20,840 per dollar as of 3:02 p.m. in Hanoi, compared with 20,843 at the end of last week, according to data compiled by Bloomberg. The State Bank of Vietnam set its daily reference rate at 20,828, unchanged since December 2011, according to its website. The currency is allowed to trade as much as 1 percent on either side of the rate.