Vietnam’s Bonds Decline on Inflation Outlook; Dong Weakens

Vietnam’s government bonds dropped for a second day on speculation investors trimmed purchases on concern that faster inflation will erode returns from debt securities. The dong weakened.

“There’s almost no trading these days since most investors wanted to wait for a clearer view of interest rates given that inflation seemed to pick up again,” said Hoang Thanh Tam, head of the fixed-income department at Vietnam Maritime Commercial Joint-Stock Bank in Hanoi.

Gains in consumer prices quickened to 6.48 percent in September from a year earlier, after rising 5.04 percent in August, the General Statistics Office said in Hanoi today. The median estimate of six economists in a Bloomberg News survey was for a 5.15 percent increase. Prices gained 2.2 percent from last month, the most since May 2011.

The benchmark five-year bond yield added five basis points, or 0.05 percentage point, to 10.08 percent, according to a daily fixing from banks compiled by Bloomberg.

The dong weakened to 20,875 per dollar as of 4 p.m. in Hanoi, compared with 20,868 yesterday, according to data compiled by Bloomberg. The central bank set its reference rate at 20,828, unchanged since Dec. 26, according to its website. The currency is allowed to trade as much as 1 percent on either side of the fixing.

To contact Bloomberg News staff for this story: Nguyen Dieu Tu Uyen in Hanoi at uyen1@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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