Vietnamese Bonds Rise on August Inflation Outlook; Dong Steady

Vietnam’s government bonds rose, pushing the benchmark five-year yield to the lowest level in more than three weeks, after the government forecast inflation would ease this month. The dong was little changed.

Consumer prices may fall in August from July on lower food and fuel costs, Vu Duc Dam, chairman of the Government Office, said at a press conference in Hanoi late yesterday. Inflation slowed 0.29 percent last month from June, official data show.

“Easing inflation will give the central bank room to reduce interest rates,” said Vu Anh Duc, a Hanoi-based senior fixed-income dealer at Vietnam Joint-Stock Commercial Bank for Industry & Trade. “Investors will likely increase bond holdings.”

The five-year yield dropped three basis points, or 0.03 percentage point, to 9.77 percent as of 4:07 p.m. in Hanoi, the lowest level since July 6, according to daily fixing prices from banks compiled by Bloomberg.

The dong traded at 20,865 per dollar, compared with 20,868 yesterday, according to data from banks compiled by Bloomberg. The central bank set the currency’s reference rate at 20,828 per dollar, unchanged since Dec. 26, according to its website. The currency is allowed to fluctuate by as much as 1 percent on either side of that rate.

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: James Regan at jregan19@bloomberg.net

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