Vietnam's dong falls on speculation inflation will accelerate

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Vietnam's dong weakened, snapping a two-day gain, on speculation inflation will accelerate.

Consumer prices rose 17.51 percent in April from a year earlier, the most in 28 months, stoked by increases in fuel and electricity prices. The country's central bank devalued its currency by about 7 percent on Feb. 11 as it tried to curb Vietnam's trade deficit.

"We expect weakness in the dong to resurface as inflation edges higher in the coming months," Credit Suisse Group AG (CSGN) said in a research note released Monday.

The dong dropped 0.2 percent to 20,620 per dollar as of 4:09 p.m. in Hanoi, according to data compiled by Bloomberg.

The State Bank of Vietnam fixed the currency's reference rate at 20,708, unchanged from May 6, its website showed. The currency is allowed to trade up to 1 percent on either side of the fixing.

Vietnam's benchmark five-year bonds gained, with yields dropping three basis points, or 0.03 percentage point, to 12.75 percent, according to a daily fixing price from banks compiled by Bloomberg.

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