Vietnam five-year bond yield rises to 10-week high on inflation

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Vietnam's bonds fell, pushing the five-year yield to a 10-week high, on speculation quickening inflation and a surging interbank rate are damping demand. The dong was little changed.

Consumer prices rose 7.29 percent in July from a year earlier, the most in 14 months, official figures show. The overnight interbank rate climbed 3.84 percentage points this month to 4.64 percent, according to data compiled by Bloomberg.

"Factors for an ongoing downtrend of bonds are lining up, at least in the short-term, with higher inflationary pressure, and continued high interbank rates," Pham Luu Hung, associate director of institutional research and investment advisory at Saigon Securities Inc. in Hanoi, wrote in a research note today.

The five-year yield rose three basis points, or 0.03 percentage point, to 8.48 percent, the highest since May 17, according to a daily fixing from lenders compiled by Bloomberg. The yield increased 12 basis points last week.

The dong was little changed at 21,215 per dollar as of 4 p.m. in Hanoi, data compiled by Bloomberg show. The State Bank of Vietnam set its reference rate at 21,036 today, unchanged since June 28, according to its website. The currency is allowed to trade as much as 1 percent on either side of the daily fixing.

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