Vietnam’s one-year government bonds rose, driving yields to a one-week low, after the central bank cut interest rates for the third straight month to bolster economic growth. The dong gained.
The State Bank of Vietnam lowered its refinancing rate to 12 percent from 13 percent with effect from today, according to a May 25 statement on its website. It reduced the so-called repurchase and discount rates by one percentage point to 11 percent and 10 percent, respectively. The inflation rate dropped to a 21-month low of 8.34 percent in May.
“Most of the macroeconomic indicators are indicating that Vietnam’s economy is on its way to stabilization, which supports bond-price appreciation,” Le Nguyet Anh, research manager at Ho Chi Minh City-based ACB Securities Co., wrote in a note today. A further easing of inflation next month may allow policy makers to cut rates again, she wrote.
The yield on one-year government notes fell one basis point, or 0.01 percentage point, to 8.84 percent, the lowest level in a week, according to a daily fixing from banks compiled by Bloomberg. The yield on five-year bonds was little changed at 9.68 percent.
The dong rose 0.2 percent to 20,827 per dollar as of 1:45 p.m. in Hanoi, according to data compiled by Bloomberg. The central bank fixed the reference rate at 20,828 today, according to its website. The currency is allowed to trade as much as 1 percent on either side of the rate.
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