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Bond yields rise to six-month high on inflation outlook
Vietnam’s five-year bonds dropped, pushing yields to the highest level in six months, after the central bank governor said inflation will quicken by the end of the year. The dong gained.
The country is facing faster inflation as economic growth strengthens, State Bank of Vietnam Governor Nguyen Van Giau said in a statement on the website Wednesday.
“Investors are concerned that inflation will accelerate in the coming months so they are expecting higher returns for their investments,” said Duong Minh Duc, a fixed-income trader at Ho Chi Minh City-based Saigon Securities Inc.
The yield on the five-year notes climbed 22 basis points, the most in two weeks, to 9.76 percent, the highest since January 2, according to a daily fixing price from about 10 banks compiled by Bloomberg. A basis point is 0.01 percentage point.
Vietnam may struggle to keep inflation down in the last six months as domestic consumption and demand increase, Indochina Capital Vietnam Holdings Ltd., a fund management company, said last week. Consumer prices rose 3.9 percent in June from a year earlier, the slowest pace since January 2004.
The State Treasury will sell VND1 trillion (US$56 million) of bonds on July 23, according to a statement on the Hanoi Stock Exchange Wednesday. The sale will consist of VND500 billion of two-year notes, and VND500 billion of three-year debt.
The dong traded at VND17,794 per dollar as of 2:433 p.m. local time, versus VND17,807 on Tuesday, according to data compiled by Bloomberg.
The central bank set the reference rate at VND16,960, compared with VND16,959 on Tuesday, its website showed. The currency is allowed to trade by as much as 5 percent on either side of the official rate.
thanhnien, Bloomberg
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