Exchange rate "turns around" continuously
The fluctuation of the USD/VND exchange rate is one of the “hot spots” in the financial market at this time. In mid-August, the USD suddenly increased sharply and surpassed the 24,000 VND/USD mark. After that, the greenback continuously fluctuated within a wide range but still maintained the 24,000 VND mark in the selling direction.
In the early morning of August 23, the market had no clear trend. While some places adjusted the exchange rate down very deeply, in many other places, the greenback still had a clear tendency to "heat up".
Orient Commercial Joint Stock Bank (OCB ) shockingly reduced the exchange rate. The USD price is traded at: 23,636 - 24,061, down 117 VND/USD for buying, down 157 VND/USD for selling compared to the end of yesterday.
The USD/VND exchange rate could reach 24,500 VND/USD, or even 25,000 VND/USD by the end of this year as import demand increases. Illustrative photo
Vietnam Joint Stock Commercial Bank for Industry and Trade ( VietinBank ) is listing the exchange rate at: 23,755 VND/USD - 24,095 VND/USD, up 40 VND/USD for buying but down 40 VND/USD for selling.
On the other hand, the Bank for Foreign Trade of Vietnam ( Vietcombank ) suddenly adjusted the USD price up significantly. The exchange rate at Vietcombank is bought and sold at: 23,750 - 24,090, an increase of 20 VND/USD in both buying and selling directions.
Vietnam Export Import Commercial Joint Stock Bank (Eximbank) is "on the same side" with Vietcombank when adjusting the exchange rate up by 30 VND/USD to 23,800 VND/USD - 24,130 VND/USD.
In the free market, the US dollar cooled down but still maintained the selling price of 24,000 VND/USD. In Hang Bac and Ha Trung – the capital’s foreign currency streets, the USD/VND exchange rate is commonly traded at: 23,950 VND/USD – 24,030 VND/USD. At different stores, the difference can be 10 VND/USD.
The US dollar remains strong in the world market
The USD/VND exchange rate fluctuated in opposite directions even though the USD remained strong in the world market.
The US dollar edged higher against a basket of currencies, near a two-month high hit last week, as traders awaited the Jackson Hole Symposium later in the week.
The US dollar index, which measures the currency against six major currencies, was up 0.3% at 103.61. The index is near a two-month high of 103.68, reached last week as concerns about the Chinese economy and bets that US interest rates will remain high lifted the greenback.
Overall moves in the currency market are expected to be limited ahead of Federal Reserve Chairman Jerome Powell's speech at the Fed's central banking symposium in Jackson Hole, Wyoming, taking place on August 24-26.
“Powell’s appearance will be watched very closely,” said Helen Given, a foreign exchange trader at Monex USA in Washington.
“I don’t see any big moves in the dollar ahead of the symposium; no one wants to be caught on the wrong side of the market,” said a cautious Helen Given. Traders are also keeping an eye on the BRICS summit in Johannesburg for any news on China’s stimulus package.
“Right now, the world is anxiously watching China for further stimulus,” said Monex’s Given.
“It would be too strong to call China’s economic recovery “slow” at this point,” she said, adding that signs point to a contraction in the economy, which in turn is pushing riskier assets lower.
The USD continues to increase in value on the world market. Illustrative photo
Chinese leader Xi Jinping told the BRICS bloc on Tuesday that China's economy is resilient and the fundamentals for its long-term growth remain unchanged.
Riskier assets took a hit last week and US Treasury yields jumped to near 16-year highs as investors worried about China's slowing economic growth and traders prepared for US interest rates to stay higher for longer.
USD/VND exchange rate may reach 25,000 VND
Dr. Nguyen Tri Hieu, a banking and finance expert, believes that there are currently four main reasons why the US dollar is getting stronger compared to the dong. Firstly, the value of the dollar on the world market increases, the USD Index increases, thereby reducing the value of the dong.
Second, the value of the dong has decreased after the State Bank of Vietnam cut its operating interest rate four times. In theory, such interest rate cuts will cause the value of the dong to decrease.
Third, the economy is weakening, reducing the attractiveness of the dong.
Fourth, imports are in high demand. That means the demand for US dollars is high.
The combination of the above factors has pushed the exchange rate up.
Dr. Nguyen Tri Hieu predicts that from now until the end of the year, the possibility of the USD continuing to increase is still there as the FED still leaves open the possibility of raising interest rates 1 to 2 times. Each time like that will cause the exchange rate to increase.
“The USD/VND exchange rate is likely to reach 24,500 VND or maybe 25,000 VND by the end of the year when the demand for foreign currency for imports is very large,” predicted Dr. Nguyen Tri Hieu.
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