Bloomberg News

Vietnam One-Year Bonds Fall as Inflation Quickens; Dong Steady

October 24, 2012

Vietnam’s one-year bonds fell after inflation accelerated more than economists forecast, limiting the scope for policy makers to reduce interest rates. The dong was little changed.

Consumer prices rose 7 percent in October from a year earlier, the most since May, according to data released by the General Statistics Office in Hanoi today. The median of four estimates in a Bloomberg News survey was for a 6.75 percent increase. The economy has failed to expand by more than 5 percent in each of the first three quarters of this year, after growing 5.9 percent in 2011, official data show.

“This is cutting into the State Bank of Vietnam’s space to ease monetary policy,” Vincent Conti, an economist at Australia & New Zealand Banking Group Ltd. in Singapore, wrote in a research note today. “Even as 2012 growth is threatening to come in slower than the government’s downwardly revised target of 5.2 percent.”

The yield on the one-year bonds rose five basis points, or 0.05 percentage point, to 9.25 percent, according to a daily fixing rate from banks compiled by Bloomberg. That’s the biggest increase since Oct. 15. The yield on the benchmark five-year notes was unchanged at 10.30 percent.

The dong traded at 20,848 per dollar as of 2:22 p.m. in Hanoi, compared with 20,854 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 trade as much as 1 percent on either side of the fixing.

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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