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Oct. 12 (Bloomberg) -- Vietnam’s dong held near a two-week low on speculation policy makers will allow the currency to weaken as the nation’s trade deficit widens. Government bonds gained.
The shortfall jumped to $1 billion last month from a revised $396 million in August, government data show. The exchange rate is under “large” pressure as the nation’s foreign-exchange reserves remain “thin,” Communist Party General Secretary Nguyen Phu Trong said in the text of a speech posted on the government’s website on Oct. 10.
The dong traded at 20,873 per dollar as of 2:50 p.m. in Hanoi, compared with 20,868 yesterday, according to data compiled by Bloomberg. The central bank set the currency’s reference rate at 20,668 today, the same as yesterday, according to its website. It weakened the reference rate for the fourth time this month yesterday, from 20,653 on Oct. 10. The local currency is allowed to trade up to 1 percent on either side of the fixing.
The central bank may weaken reference rate by less than 1 percent by the year-end, Marc Djandji and Doan Thi Thu Hoai, analysts at Viet Capital Securities Joint-Stock Co. in Ho Chi Minh City, wrote in a research note yesterday.
“The central bank may choose to adjust the official exchange rate on a daily basis rather than a one-time adjustment to avoid a shock,” the analysts wrote.
The yield on Vietnam’s five-year bonds fell one basis point, or 0.01 percentage point, to 12.41 percent, according to a daily fixing price from banks compiled by Bloomberg.
--Diep Ngoc Pham. Editors: Anil Varma, Ven Ram
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