Vietnamese bonds fell the most in almost two weeks on speculation the government will tighten monetary policy further to curb inflation. The dong gained for a second straight day.
Vietnam will raise average electricity prices by 15.3 percent starting March 1, raising concern price gains will accelerate. Consumer prices increased 12.17 percent in January from a year earlier, the fastest pace since February 2009. The central bank lifted the refinancing rate on Feb. 17 to 11 percent from 9 percent.
"I think bond yields will rise because people are expecting that monetary policy will be tightened further," said Dam Trung Kien, a Hanoi-based trader at Bao Viet Fund Management Co., a unit of Vietnam's biggest insurer. "The confirmed power- price increase will not only boost household expenses but also push up input costs in the economy."
The yield on five-year bonds rose seven basis points, the most since Feb. 8, to 11.53 percent, as of 3:40 p.m. in Hanoi, according to a daily fixing rate from banks compiled by Bloomberg. A basis point is 0.01 percentage point.
Prime Minister Nguyen Tan Dung has approved lowering this year's credit-growth target to 20 percent from 23 percent, online newswire VnExpress reported Monday, citing central bank Governor Nguyen Van Giau.
The dong rose 0.2 percent to 20,835 per dollar, according to data compiled by Bloomberg. It traded between 22,100 and 22,230 at money changers in Ho Chi Minh City, compared with between 22,030 and 22,120 on Feb. 18, according to a telephone- directory information service run by state-owned Vietnam Posts & Telecommunications.
The central bank set the reference rate at 20,673, compared with 20,678 on Feb. 18. The currency is allowed to trade up to 1 percent on either side of the rate.