Vietnam bonds rise as stable exchange rate boosts foreign demand

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Vietnam's three-year bonds rose on Wednesday, driving down yields to a two-week low, on speculation efforts by the central bank to promote a stable currency will boost demand from foreign investors.

The nation's currency is allowed to trade as much as 1 percent on either side of a daily reference rate, which has been kept at 20,828 per dollar since Dec. 26. Inflation slowed to an annualized 5.35 percent in July, the least since November 2009, the General Statistics Office in Hanoi reported on Tuesday.

"Foreign investors probably have a more positive view of the Vietnamese economy," said Ha Thi Quynh Trang, a Hanoi-based fixed-income trader at Bank for Investment & Development of Vietnam. "If the exchange rate remains stable toward the end of the year, more foreign investors will participate in the bond market."

The yield on three-year notes fell four basis points, or 0.04 percentage point, to 9.72 percent, the lowest level since July 11, according to a daily fixing rate from banks compiled by Bloomberg.

The dong was little changed at 20,885 per dollar as of 3:15 p.m. in Hanoi, compared with 20,880 yesterday, according to data compiled by Bloomberg. The currency has traded at an average rate of 20,894 this year.

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