Bloomberg News

Vietnam Dong Has Biggest Annual Loss Since 2008 on Inflation

December 30, 2011

Dec. 30 (Bloomberg) -- Vietnam’s dong had its biggest yearly decline since 2008 and bond yields surged as policy makers confront the fastest inflation rate in Asia.

Consumer prices rose 18.1 percent in December from a year earlier after increasing 19.8 percent in November, official data showed last week. Vietnam can reduce inflation to below 10 percent in 2012 so long as money-supply growth doesn’t exceed 16 percent, Do Thuc, general director of the General Statistics Office, said yesterday.

“The government is still determined to reduce the inflation rate in 2012,” said Nguyen Hong Quang, a Hanoi-based fixed-income dealer at the Bank for Agriculture & Rural Development, the country’s biggest lender.

The dong slid 7.4 percent this year, the worst performance among Asia’s most-traded currencies after India’s rupee. The currency weakened 0.1 percent today to 21,049 per dollar as of 4 p.m. in Hanoi, according to data compiled by Bloomberg.

The central bank fixed the reference rate at 20,828, unchanged for a fourth day, according to its website. The currency is allowed to trade up to 1 percent on either side of the rate.

Policy makers devalued the dong on Feb. 11 by about 7 percent, the most since at least 1993, to help curb the nation’s trade deficit and narrow the gap between the official and black- market rates.

The yield on three-year government bonds surged 1.5 percentage points in 2011. It fell three basis points, or 0.03 percentage point, to 12.48 percent today, according to a daily fixing from banks compiled by Bloomberg.

--Diep Ngoc Pham. Editor: Ven Ram, Simon Harvey

To contact Bloomberg News staff for this story: Diep Ngoc Pham in Hanoi at dpham5@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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