Bloomberg News

Vietnam 5-Year Bonds Fall a Ninth Week as Inflation Picks Up

October 19, 2012

Vietnam’s five-year bonds fell for a ninth week, the longest stretch since August, on concern inflation will accelerate. The dong was little changed.

The government will undertake “drastic” measures to keep consumer-price gains below 10 percent in 2012, Finance Minister Vuong Dinh Hue said Oct. 14. The government said two weeks ago it will strive to curb annual inflation to 8 percent after costs in the economy rose 6.48 percent in September, the first acceleration in more than a year.

“Investors are worried that with the return of inflation the central bank won’t reduce interest rates any more,” said Nguyen Duy Phong, a Ho Chi Minh City-based analyst at Viet Capital Securities.

The yield on the bonds rose five basis points, or 0.05 percentage point, this week to 10.37 percent, according to a daily fixing rate from banks compiled by Bloomberg. The yield was unchanged today.

The dong traded at 20,843 per dollar as of 4:02 p.m. in Hanoi, compared with 20,845 yesterday, according to data compiled by Bloomberg. The currency has gained 0.1 percent this week.

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 trade up to 1 percent on either side of the rate.

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

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net


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