Vietnam Bonds Yields Reach 17-Month Low on Rates; Dong Weakens

Vietnam’s five-year bonds rose, pushing the yield to a 17-month low, on speculation slowing inflation will prompt the central bank to reduce borrowing costs. The dong fell by the most in a month.

The monetary authority cut its repurchase rate to 12 percent from 13 percent on April 11 and trimmed its refinancing and discount rates by a percentage point each. Inflation eased to a one-year low of 14.15 percent in March, government data show. Slowing consumer-price gains may allow the nation to cut borrowing costs by 100 basis points in each of the second, third and fourth quarters, central bank Governor Nguyen Van Binh said last month.

“Yields are dropping because consumer prices are expected to increase by as little as 0.1 percent this month” from March, said Cao Tan Phat, Ho Chi Minh City-based analyst at ACB Securities Co. Prices rose 0.2 percent last month from February.

The yield on five-year bonds fell three basis points, or 0.03 percentage point, to 11.06 percent, according to a daily fixing from banks compiled by Bloomberg. That was the lowest level since Nov. 10, 2010.

The dong weakened 0.6 percent to 20,840 per dollar as of 3:03 p.m. in Hanoi, according to data compiled by Bloomberg. The central bank set the currency’s 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 official fixing.

To contact Bloomberg News staff for this story: Nguyen Kieu Giang in Hanoi at giang1@bloomberg.net

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

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