Feb. 14 (Bloomberg) -- Vietnam’s five-year government bonds rose, driving yields to a 10-month low, on speculation slowing inflation will prompt the central bank to cut borrowing costs. The dong was little changed.
The State Bank of Vietnam instructed lenders to “reduce interest rates to levels that are suitable to the macroeconomic situation,” according to a statement posted yesterday on its website. Gains in consumer prices cooled for a fifth month in January, climbing 17.27 percent from a year earlier.
“Monetary policy should ease soon, while the positive downward trend in inflation is making bond yields go lower,” said Francois Chavasseau, head of fixed-income research at Sacombank Securities Joint-Stock Co. in Ho Chi Minh City.
Yields on the debt fell three basis points, or 0.03 percentage point, to 12.31 percent as of 3:09 p.m. in Hanoi, according to a daily fixing from banks compiled by Bloomberg. That was the lowest level since April 19.
Prime Minister Nguyen Tan Dung said on Dec. 29 that interest rates should be lowered as inflation slows.
The dong was little changed at 20,858 per dollar, compared with 20,853 yesterday, according to data compiled by Bloomberg. The central bank set the reference rate at 20,828, according to its website. The currency is allowed to trade as much as 1 percent on either side of the rate.
To contact the reporter on this story: Nick Heath in Hanoi at firstname.lastname@example.org
To contact the editor responsible for this story: Sandy Hendry at email@example.com