Bloomberg News

Vietnam Bonds Advance on Rate-Cut Optimism; Dong Weakens

February 15, 2012

Feb. 15 (Bloomberg) -- Vietnam’s five-year bonds gained, pushing their yield to the lowest level since April, on speculation interest rates will be cut. The dong weakened.

The State Bank of Vietnam instructed lenders to “reduce interest rates to levels that are suitable to the macroeconomic situation,” according to a statement posted Feb. 13 on its website. Inflation cooled for a fifth month in January, with consumer prices climbing 17.3 percent from a year earlier, the least in 10 months, official data show.

“The government keeps reiterating its determination to bring down interest rates and slowing inflation has boosted investors’ expectations for a cut,” analysts including Do Thi Phuong Trang at Bank for Investment and Development of Vietnam wrote in a note today. Demand for two- and five-year bonds has strengthened, they wrote.

The yields on five-year notes fell one basis point, or 0.01 percentage point, to 12.29 percent as of 4:18 p.m. in Hanoi, according to a daily fixing from banks compiled by Bloomberg. The two-year yield declined one basis point to 12.41 percent.

The dong fell 0.3 percent to 20,909 per dollar, according to data compiled by Bloomberg. The central bank set the reference rate at 20,828, its website showed. The currency is allowed to trade as much as 1 percent on either side of the official rate.

--Nguyen Kieu Giang. Editor: James Regan

To contact Bloomberg News staff for this story: Nguyen Kieu Giang in Hanoi at

To contact the editor responsible for this story: Sandy Hendry at

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