Vietnam dong gains after trade gap narrows; bonds little changed

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Vietnam's dong strengthened, snapping a three-day decline, after the government said the trade deficit narrowed in January. Bonds held stable.

The country's trade gap narrowed to $100 million, compared with a revised deficit of $269 million in December, according to preliminary data released Thursday by the General Statistics Office in Hanoi.

The currency gained 0.2 percent, to 20,976 as of 4:45 p.m. local time, according to prices from banks compiled by Bloomberg. The central bank fixed the reference rate at 20,828, unchanged since Dec. 26, according to its website. The currency is allowed to trade up to 1 percent on either side of the rate.

"The smaller trade deficit has boosted investors' optimism about the economy," said Lai Tat Ha, head of currency trading at Hanoi-based Vietnam Technological & Commercial Joint-Stock Bank. "It also made traders more confident in the central bank's commitment to keeping the dong stable this year."

Vietnam will adjust policy interest rates to "more suitable" levels after the first quarter, central bank Governor Nguyen Van Binh said in Jan. 11. Binh also forecasts the dong to depreciate between 2 percent and 3 percent this year.

That compares with its 7.4 percent drop against the dollar last year. Vietnam is targeting a balance-of-payments surplus of $3 billion in 2012 and enough foreign-exchange reserves to cover 12 to 15 weeks of imports by 2015, he said last month.

The yield on benchmark five-year government bonds was unchanged at 12.38 percent today, according to a daily fixing from banks compiled by Bloomberg.

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