Bloomberg News

Vietnam Bonds Rise Most in Six Weeks After Rate Cuts; Dong Falls

April 13, 2012

Vietnam’s government bonds completed their biggest weekly gain in six weeks after the central bank cut its benchmark interest rates to support the economy. The dong weakened.

Five-year yields slumped by the most since the five days ended March 2 as the State Bank of Vietnam cut its repurchase rate to 12 percent from 13 percent, the second reduction in a less than a month. The monetary authority also trimmed its refinancing and discount rates by a percentage point each.

“Bond yields’ downtrend is confirmed now because of the central bank’s rate cuts and good liquidity at banks,” said Do Hoang Quynh Trang, a fixed-income trader at Hanoi-based Ocean Commercial Joint-Stock Bank.

The yield on five-year notes fell 20 basis points, or 0.20 percentage point, this week to 11.22 percent, according to a daily fixing from banks compiled by Bloomberg. It rose two basis points today. Two-year yields dropped 22 basis points this week to 11.21 percent.

Vietnam Bank for Social Policies will offer 2 trillion dong ($96 million) of three- and five-year bonds on April 17, according to a statement on the Hanoi Stock Exchange website.

The dong fell 0.4 percent today and for the week to 20,918 per dollar as of 4:20 p.m. in Hanoi, according to data compiled by Bloomberg. The central bank set the reference rate at 20,828, unchanged since Dec. 26, its website showed. The currency is allowed to trade as much as 1 percent on either side of the fixing.

--Nguyen Dieu Tu Uyen. Editor: James Regan

To contact Bloomberg News staff for this story: Nguyen Dieu Tu Uyen in Hanoi at uyen1@bloomberg.net

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


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