Vietnam's three-year bonds had the worst week in two months on speculation banks will scale back investments as they hoard cash to meet year-end requirements. The dong was stable on Friday.
The State Treasury sold fewer securities and paid higher yields at an auction on Thursday than at a sale last week, according to the Hanoi Stock Exchange website. It issued VND1.45 trillion ($70 million) of two-year notes at 9.1 percent and 1.75 trillion dong of three-year debt at 9.3 percent. Investors picked up VND2 trillion each of similar-maturity bonds at 9 percent and 9.25 percent, respectively, on Dec. 6.
"Banks must hold cash to meet payment and withdrawal demand near the end of the year, so they are less interested in buying bonds," said Nguyen Thi Thu Trang, senior analyst at Hanoi-based BIDV Securities Joint-Stock Co.
The yield on the three-year notes rose 10 basis points, or 0.1 percentage point this week, to 9.41 percent in the biggest increase since the five days ended Oct. 19, according to a daily fixing from banks compiled by Bloomberg. The yield climbed six basis points on Friday.
The dong traded at 20,848 per dollar as of 3:25 p.m. in Hanoi on Friday, compared with 20,843 at the end of last week and 20,850 yesterday, according to prices from banks compiled by Bloomberg. The State Bank of Vietnam fixed its daily reference rate at 20,828, unchanged since Dec. 26, according to its website. The currency is allowed to trade as much as 1 percent on either side of the rate.