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Bonds fall on inflation outlook; dong is little changed
Five-year bonds fell this week on speculation inflation may return by the end of this year as the economy shows signs of recovery. The dong was little changed.
Consumer prices rose 9.2 percent in April from a year earlier, easing from an 11.3 percent pace in March, according to figures from the General Statistics Office in Hanoi.
“There are many concerns that inflation will return by the end of this year since the economy has signs of recovery,” said Pham Phuong Lan, Hanoi-based head of fixed-income trading at the Bank for Investment & Development of Vietnam. The inflation pressures may push the central bank to raise interest rates again in the last months of the year, she said.
Policy makers in the Southeast Asian nation have implemented a series of measures to bolster economic growth so far this year, including a subsidy loan program and stimulus packages. Vietnamese Prime Minister Nguyen Tan Dung on April 20 valued the country’s economic-stimulus spending at US$8 billion.
The economy may expand by as much as 5.5 percent this year, he said in Hong Kong at that time.
The yield on the five-year note rose 9 basis points this week to 9.16 percent, according to a daily fixing price from 10 banks compiled by Bloomberg.
The dong traded at VND17,782 against the dollar, according to data compiled by Bloomberg.
The State Bank of Vietnam fixed Friday’s reference rate at VND16,935 per dollar, versus VND16,937 on Thursday, according to the bank’s website. The currency is allowed to trade up to 5 percent on either side of the official rate.
thanhnien, Bloomberg
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