Bond yield rises to 6-month high on inflation concerns

VNStockNews.com - Vietnam’s government bonds fell the most since March Wednesday, sending the yield on five-year notes to a six-month high, on speculation an increase in gasoline prices will fuel inflation.

The Ministry of Finance has allowed state-run fuel retailers to raise the price of 92-RON gasoline, the most common grade in Vietnam, to VND14,200 (US$0.80) per liter from VND13,500, starting Wednesday, according to a statement on the government’s website. The increase is to reflect higher global costs for oil, the statement said.

“Investors are concerned that inflation will accelerate after the government raised fuel prices,” said Duong Minh Duc, a fixed-income trader at Saigon Securities Inc. by phone from Hanoi.

The yield on the benchmark five-year notes surged 24 basis points, the most since March 24, to 9.65%, the highest since January 2, according to prices from about 10 banks compiled by Bloomberg. A basis point is 0.01 percentage point.

Consumer prices rose 3.9% in June from a year earlier, the General Statistics Office said last week. That was the smallest increase since January 2004. The National Assembly this month set a target ceiling for inflation of 10% this year. (Bloomberg)