Vietnam’s bond yields drop to one-week low on inflation outlook
Vietnam’s five-year bonds rose, pushing yields to a one-week low, on speculation demand for the securities will increase as inflation slows. The dong slid.
The pace of increases in consumer prices (VNCPIYOY) decelerated for a fourth month in December to 18.1 percent from 19.8 percent in November, official data showed on Dec. 23. The country can reduce the inflation rate to below 10 percent in 2012 as long as money-supply growth doesn’t exceed 16 percent, Do Thuc, general director of the General Statistics Office, said at a briefing in Hanoi today.
“Investors are buying bonds because they anticipate yields will fall next year,” said Nguyen Thanh Danh, a Ho Chi Minh City-based money-market dealer at Saigon Thuong Tin Commercial Joint-Stock Bank. “Rates are expected to decline with the inflation rate.”
The yield (GGVN5YR) on five-year government notes fell one basis point, or 0.01 percentage point, to 12.55 percent, the lowest level since Dec. 22, according to a daily fixing from banks compiled by Bloomberg.
The State Treasury sold 900 billion dong ($42.8 million) of three-year bonds yesterday, compared with 700 billion dong issued last week, according to the Hanoi Stock Exchange.
The dong weakened 0.2 percent to 21,038 per dollar as of 2:40 p.m. in Hanoi, according to data compiled by Bloomberg. The central bank fixed the reference rate (SBVNUSD) at 20,828 today, unchanged for a third day, according to its website. The currency is allowed to trade up to 1 percent on either side of the rate.
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