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Vietnam’s bonds rise on inflation outlook; dong holds steady
Vietnam’s benchmark bonds rose Thursday on speculation inflation will slow following cuts in fuel costs and interest rates. The local currency stayed at its weakest level in at least 15 years versus the dollar.
The government will release its estimate for October inflation this week, according to the Hanoi-based General Statistic Office. The consumer price index climbed 27.9 percent from a year earlier in September, after a 28.3 percent increase the previous month that was the biggest since at least 1992. The drop in the inflation rate was the first in 20 months.
“Bond yields have fallen as investors forecast that inflation may have slowed this month,” said Vu Anh Duc, a senior dealer in the fixed-income department at Hanoi-based Vietnam Bank for Industry and Trade, known as VietinBank.
The yield on the five-year note fell 3 basis points to 15.98 percent, according to a daily fixing price from 10 banks compiled by Bloomberg. A basis point is 0.01 percentage point.
Reductions in interest rates are also helping boost demand for debt, Duc said. The central bank this week cut its benchmark rate to 13 percent from 14 percent to limit the “negative impact” of a possible global recession. The government lowered gasoline prices for the third time this month after crude oil declined.
Vietnam’s consumer prices will fall this month following fuel-price cuts and a decline in food costs, Nguoi Lao Dong newspaper reported Thursday, citing Cao Sy Kiem, a member of the National Advisory Council for Monetary Policies.
The local currency was unchanged at VND16,850 per dollar, its weakest since at least 1993, according to data compiled by Bloomberg. The dong has dropped 1.5 percent so far this month.
Thanhnien
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