Vietnam's bonds fell Monday on speculation banks are using funds to lend in the money market rather than buy government debt. The dong weakened.
Interbank lending rates more than doubled to as high as 36.5 percent last week from a maximum 16.2 percent the week before, said Nguyen Duy Phong, an analyst at ACB Securities Co. in Ho Chi Minh City.
"Since interbank lending rates rose significantly and are higher than bond yields, commercial banks have been encouraged to lend in the interbank market to get higher profits," ACB analysts led by Phong wrote in a research note obtained today.
Yields on five-year government debt rose two basis points, or 0.02 percentage point, to 12.49 percent, according to a daily fixing from banks compiled by Bloomberg.
The dong fell 0.1 percent to 21,032 per dollar, 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.
In the so-called black market, the dong traded as low as 21,380 per dollar at gold shops in Hanoi Monday, according to a telephone information service, known as 1080, run by state-owned Vietnam Posts & Telecommunications.