Vietnam's two-year bonds gained Friday on speculation commercial lenders will lower interest rates after inflation slowed for a fourth month. The dong advanced.
Consumer prices climbed 18.13 percent this month from a year earlier, compared with a 19.83 percent increase in November, according to data from the General Statistics Office Friday.
Interest rates on dong deposits may ease to around 10 percent by the end of next year should inflation cool to below 10 percent, online newspaper Dan Tri reported Thursday, citing central bank Governor Nguyen Van Binh. Lenders are currently offering rates of 14 percent, the central bank said on its website Friday.
"Yields dropped as investors expect interest rates will decline next year," said Do Thi Phuong Trang, a trader at the treasury department of Bank for Investment & Development of Vietnam.
The yield on the benchmark two-year notes fell eight basis points, or 0.08 percentage point, to 12.59 percent, according to a daily fixing from banks compiled by Bloomberg.
The dong gained 0.1 percent to 20,983 per dollar as of 3:22 p.m. in Hanoi, according to data compiled by Bloomberg. The central bank fixed the reference rate at 20,813, unchanged since Dec. 14, according to its website. The currency is allowed to trade as much as 1 percent on either side of the rate.