June 7 (Bloomberg) -- Vietnam’s five-year bonds rose for a sixth day, pushing yields to a three-year low, on speculation the central bank will cut borrowing costs further as inflation slows. The dong was steady.
The State Bank of Vietnam will “steer interest rates on a declining path,” Deputy Governor Le Minh Hung said in a statement distributed at a conference in the central Vietnamese town of Dong Ha on June 4. The monetary authority lowered benchmark rates by a total 300 basis points in the last three months. Annual inflation was 8.34 percent in May, the least since August 2010, according to government data.
“Banks have surplus cash and think interest rates will fall, so they’ve started buying bonds,” said Nguyen Duy Phong, a Ho Chi Minh City-based analyst at Viet Capital Securities Co.
Five-year bond yields dropped five basis points, or 0.05 percentage point, to 9.47 percent, according to a daily fixing rate from banks compiled by Bloomberg. That’s the lowest level since June 30, 2009. The yield fell 14 basis points this week.
The dong traded at 21,001 per dollar as of 4:28 p.m. in Hanoi, according to data compiled by Bloomberg, unchanged from yesterday. 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.
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