Vietnam’s government bonds fell, driving the three-year yield to a five-month high, on concern faster inflation will hurt demand for fixed-income assets. The dong weakened.

“Inflation may continue to pick up toward the end of the year due to holiday-season spending,” said Do Hoang Quynh Trang, a fixed-income trader at Ocean Commercial Joint-Stock Bank in Hanoi. “There’s very little trading since everyone seems to wait for a clearer view of the economic situation.”

Policy makers plan to help companies boost sales to reduce inventories that are at “high levels,” according to a posting on the government website that cited Planning and Investment Minister Bui Quang Vinh at a meeting with the National Assembly yesterday. Annual consumer-pricegains quickened to 6.48 percent in September from 5.04 percent in August, official data show.

The benchmark three-year bond yield added one basis point, or 0.01 percentage point, to 10.24 percent, the highest level since May 3, according to a daily fixing from banks compiled by Bloomberg.

The dong weakened to 20,865 per dollar as of 2:30 p.m. in Hanoi, from 20,848 yesterday, according to data compiled by Bloomberg. The central bank set its reference rate at 20,828, unchanged since Dec. 26, according to its website. The currency is allowed to trade as much as 1 percent on either side of the fixing.

Source: http://www.bloomberg.com