Bloomberg News

Vietnam Bonds Fall on Inflation Concern; Dong Little Changed

March 27, 2012

Vietnam’s five-year bonds fell for the first time in four days on concern fuel-price increases will fan inflation, limiting the scope for interest-rate cuts. The dong was little changed.

Vietnam raised the price of petroleum products, including gasoline, by as much as 12 percent March 7. Slower inflation may allow Vietnam to cut interest rates by 100 basis points in each of the second, third and fourth quarters, central bank Governor Nguyen Van Binh said March 12. Consumer prices rose 14.15 percent this month, the smallest gain in a year.

“People are a little bit concerned about inflation next month,” said Nguyen Duc Hai, Ho Chi Minh City-based portfolio manager at Manulife Asset Management. Banks’ reluctance to reinvest income from maturing debt also contributed to the decline in bonds, he said.

The yield on benchmark five-year notes rose four basis points, or 0.04 percentage point, to 11.47 percent, according to a daily fixing from banks compiled by Bloomberg.

The dong traded at 20,900 per dollar as of 4:20 p.m. in Hanoi, little changed from yesterday, according to data compiled by Bloomberg. The State Bank of Vietnam set its reference rate at 20,828, unchanged since Dec. 26, according to its website. The currency is allowed to fluctuate by as much as 1 percent on either side of that rate.

To contact the reporter on this story: Nick Heath in Hanoi at nheath2@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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