Vietnam Dong Falls to Record After Devaluation; Bonds Gained

(Bloomberg)--Vietnam’s dong slid to a record low against the U.S. dollar after the central bank devalued the currency for the fourth time in 15 months. Government bonds gained.

The dong dropped 6.7 percent to 20,798 per dollar as of 3:20 p.m. in Hanoi, according to data compiled by Bloomberg. The State Bank of Vietnam said today that it will fix the reference rate for the currency at 20,693 versus 18,932 yesterday. It also narrowed the trading band to 1 percent on either side of the rate from 3 percent before.

“There is still a crisis of confidence out there,” said Nizam Idris, a strategist at UBS AG in Singapore. “There’s still more pressure for the currency to depreciate some more.”

The dong traded yesterday on the black market at 21,300, 8.5 percent weaker than the official rate, and this afternoon weakened to as much as 21,550, according to a telephone information service run by Vietnam Posts & Telecommunications.

The yield on the benchmark five-year government bonds fell 2 basis points to 11.522 percent, from 11.540 percent yesterday, according to a daily fixing price from banks compiled by Bloomberg. A basis point is 0.01 percentage point.

--Nguyen Kieu Giang in Hanoi. With reporting by Jason Folkmanis in Ho Chi Minh City.

Editors: Jan Dahinten, Lars Klemming.