Vietnam’s benchmark five-year bonds rose on speculation the central bank will cut interest rates to stimulate the economy. The dong weakened the most in a month.
Vietnam’s economy may grow 5.2 percent to 5.5 percent this year, Dau Tu newspaper quoted Minister for Planning and Investment, Bui Quang Vinh, as saying today. That compares with a growth target of 5.6 percent to 5.8 percent given by Prime Minister Nguyen Tan Dung during a May 24 meeting with the World Bank. Vietnam’s manufacturing contracted in May for a second month, according to a purchasing managers’ index released by HSBC Holdings and Markit Economics on June 1.
“It’s expected the government will try to support businesses by cutting rates and also by loosening its fiscal policy,” said Nguyen Duc Hai, a Ho Chi Minh City-based portfolio manager at Manulife Asset Management.
Five-year bond yields fell four basis points or 0.04 percentage point, to 9.56 percent, according to a daily fixing rate from banks compiled by Bloomberg.
The dong dropped 0.13 percent to 20,898 per dollar as of 4:39 p.m. in Hanoi, according to data compiled by Bloomberg. That’s the biggest decline since May 4. 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.