On 10/8, the State Bank of Vietnam (SBV) raised its central exchange rate by 28 dong from last weekend, setting it at 25.491 dong per USD. This adjustment allows commercial banks to trade the US dollar within a 5% margin, ranging from 24.216 to 26.765 dong.
Despite the slight increase in the central exchange rate, USD prices at commercial banks continued their downward trend, extending a decline observed over the past two weeks.
Today, Vietcombank listed its exchange rate at 25.940 - 26.350 dong, reflecting a 90 dong decrease on both buying and selling sides since last weekend, a 0,35% reduction. BIDV adjusted its USD price to 25.970-26.350 dong, and Techcombank traded at 25.966 - 26.363 dong.
Compared to its peak of 26.500 - 26.530 dong recorded in late July, the bank exchange rate has now fallen by approximately 200 dong, nearly 0,8%. This decline has brought the overall USD price level back to, or even below, its position at the start of the year.
The free market has also seen a downward trend in USD prices. A major foreign exchange counter in TP HCM traded around 25.950 - 26.150 dong, while a similar outlet in Hanoi listed slightly higher, at 26.170 - 26.250 dong. Free market buying rates are comparable to banks, but selling rates are 100-200 dong lower.
Experts attribute the recent sharp decline of free market USD, now trading below bank rates, to several factors.
Firstly, tightened inspections on foreign exchange activities at gold shops have reduced both supply and demand for USD. Secondly, attractive dong interest rates, currently at 8,5-9% per year, encourage many to convert USD holdings into VND savings. Lastly, a narrower price gap between domestic and international gold has diminished the incentive to accumulate foreign currency for gold smuggling.
Huynh Duy Sang, Director of the Financial Markets Division at Asia Commercial Bank (ACB), told VnExpress that the USD/VND exchange rate has been more stable than expected since the beginning of the year.
Despite Vietnam experiencing a trade deficit of nearly 20 billion USD in the first six months, the interbank market exchange rate remained stable, with the dong even strengthening against the US dollar at times. This indicates that other foreign currency inflows, such as disbursed foreign direct investment (FDI) and foreign loans, have offset the trade deficit pressure.
Sang explained that the trade deficit primarily stems from increased imports of raw materials for manufacturing, such as electronic components and computer chips, alongside persistently high oil prices. He anticipates that the return of the export cycle in QIII and QIV will reduce the trade deficit and alleviate exchange rate pressure.
However, actual market developments will hinge on fluctuating oil prices and the US Federal Reserve’s (Fed) interest rate decisions. He forecasts the VND's depreciation for the entire year to be approximately 2%.
Quynh Trang
