Why does the exchange rate in Vietnam increase rapidly even though the international USD depreciates?

(NLDO) - It is forecasted that from now until the end of the year, the exchange rate will be much more stable, especially when the FED continues to cut interest rates.

On September 29, the central exchange rate was listed by the State Bank at 25,192 VND/USD, down 2 VND per USD compared to yesterday. The central exchange rate has fluctuated within a narrow range in recent days.

However, since the beginning of the year, the central rate has increased by about 3.4%. This is a fairly rapid increase compared to the same period in previous years.

Similarly, the USD price at commercial banks such as Vietcombank, BIDV , Eximbank, and Sacombank also decreased by 2 VND when it was traded around 26,211 VND/USD for buying and 26,451 VND/USD for selling.

However, since the beginning of the year, the USD price at commercial banks has also increased by about 3.5%.

USD price in Vietnam is expected to be less pressured from now until the end of the year.

In the free market, the USD price today is traded at some foreign currency exchange points at 26,550 VND/USD for buying and 26,650 VND/USD for selling, about 200 VND higher than the USD price in commercial banks.

The USD price in Vietnam has increased rapidly in the context of a sharp decline in the USD index in the international market. Over the past 8 months, the USD index (DXY) in the international market has lost about 10%. Up to now, the USD index is trading at 98 points.

Latest forecast on USD/VND exchange rate

Why is the exchange rate in Vietnam increasing rapidly despite the international USD depreciating? According to Dr. Can Van Luc, member of the Prime Minister 's Policy Advisory Council, this year, the USD depreciated by about 10% but the VND still decreased by 3.4%. This is a remarkable phenomenon and there are several main reasons.

Specifically, Vietnam's balance of payments is negative due to a surplus in goods exports but a deficit in services - especially tourism and logistics. Fluctuations in tariffs increase the need to hold foreign currency. Fluctuations in gold prices and the difference with world prices also stimulate smuggling activities, putting pressure on the foreign exchange market.

Interest rate differentials are also a factor. Currently, the US is maintaining interest rates around 4.2% - 4.5%, equivalent to the overnight lending rate in the interbank market in Vietnam. In the context of low exchange rate risks, foreign currency capital flows tend to return to the US.

"Although the exchange rate is under pressure, the VND interest rate remains stable to support economic growth. In particular, it is forecasted that from now until the end of the year and next year, the exchange rate will be much more stable, especially when the FED is expected to continue cutting interest rates. With the implementation of Decree 232/2025 replacing Decree 24/2012 on gold market management to reduce pressure on the gold market, leading to reduced pressure on the exchange rate. It is expected that the VND will depreciate by about 4% for the whole year" - Dr. Can Van Luc said.

In the context of Vietnam's exchange rate being under pressure, Professor Hoang Van Cuong, member of the National Assembly's Finance and Budget Committee, said that to achieve high GDP growth, interest rates must be kept low to encourage investment, but this puts pressure on the exchange rate.

The recent fluctuations in exchange rates have clearly revealed this trade-off. The FED's 0.25% interest rate cut has caused the USD to depreciate, temporarily stabilizing the exchange rate. The State Bank has used the method of selling foreign currency forwards effectively, and it needs to continue to promote such technical tools.

"Although the USD has weakened thanks to the FED's interest rate cut, pressure remains due to increased import demand at the end of the year to serve the shopping season, while exports to the US are at risk of decreasing due to the reciprocal tax policy. However, stabilizing the exchange rate is the key task in macroeconomic management from now until the end of the year," said Professor Hoang Van Cuong.

Source: https://nld.com.vn/vi-sao-ti-gia-tai-viet-nam-tang-nhanh-du-dong-usd-quoc-te-mat-gia-196250929120907959.htm