Vietnam bonds decline as report shows accelerating price gains

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Vietnam's bonds dropped Wednesday after a report showed month-on-month inflation in the country's two major cities accelerated in July.

Hanoi's consumer-price index climbed 1.32 percent, while Ho Chi Minh City's prices gained 1.07 percent, online newswire VnEconomy reported Wednesday, citing government data. The two cities' CPIs rose 1.21 percent and 0.69 percent respectively in June. Vietnam's annual inflation rate was 20.8 percent last month, the highest since November 2008, official data show.

"Concern about inflation has returned," said Nguyen Thanh Danh, a Ho Chi Minh City-based money-market dealer at Saigon Thuong Tin Commercial Joint-Stock Bank. "Interbank rates may increase slightly this month so banks are hesitant to buy bonds."

The yield on the benchmark five-year note increased one basis point to 12.45 percent, according to a daily fixing from banks compiled by Bloomberg. The one-week interbank deposit rate gained four basis points, or 0.04 percentage point, to 12.72 percent, according to data compiled by Bloomberg.

The dong was unchanged at 20,570 per dollar as of 3:10 p.m. in Hanoi, according to data compiled by Bloomberg. The central bank fixed the reference rate at 20,608 Wednesday, unchanged since July 11, according to its website. The currency is allowed to trade up to 1 percent on either side of the rate.

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