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Vietnam’s dong has best week since 1997 after dollar rates curb

The Vietnamese dong completed its best week since at least 1997 after the central bank set a cap on dollar deposit rates, spurring companies and individuals to shift more money into local currency. Government bonds fell.

The State Bank of Vietnam set a ceiling on dollar deposit rates on April 13, restricting interest payments for individuals to 3 percent and those for non-credit institutions to 1 percent. Holdings of dong can attract returns of as much as 14 percent.

Some small banks have been collecting as much as $15 million daily from customers wanting local currency, the government said in a statement on its website on April 27. The dong market has “gradually stabilized,” the government in a separate statement today.

The currency gained 1.8 percent this week to 20,550 as of 5 p.m. in Hanoi, according to prices from banks compiled by Bloomberg. That is the biggest weekly gain since at least March 1997. The currency was little changed today.

The central bank fixed the reference rate at 20,698 today, compared with 20,718 on April 22, according to its website. The currency is allowed to trade up to 1 percent on either side of that rate.

Government bonds slid this week, with the yield on the benchmark five-year bonds advancing 15 basis points to 12.47 percent, according to a daily fixing price from banks compiled by Bloomberg. A basis point is 0.01 percentage point.

From BloomBerg

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