USD exchange rate exceeded 24,700 VND, what was SBV's response?

The domestic USD/VND exchange rate continues to increase, following the strong upward trend of the USD index. As of the morning of October 19, the USD exchange rate listed at commercial banks continued to increase sharply, in many places it exceeded the mark of 24,700 VND, an increase of 4.09% Ytd (compared to the beginning of the year).

The domestic USD/VND exchange rate continues to increase, following the strong upward trend of the USD index.

Specifically at BIDV, the USD price is listed at 24,415 - 24,715 VND, an increase of 75 VND compared to yesterday. VietinBank has also adjusted the USD exchange rate to 24,397 - 24,737 VND. Similarly, Techcombank increased by 77 VND compared to the previous session, to 24,405 - 24,735 VND. Meanwhile, Vietcombank currently lists the USD exchange rate at 24,350 - 24,690 VND, an increase of 22 VND.

The contradiction in interest rate management between the FED and the State Bank of Vietnam (SBV) will inevitably lead to pressure on the USD/VND exchange rate. And the next movements of the exchange rate will depend heavily on the developments of the USD index. However, according to comments in the October 2023 Economic Bulletin, Vietdata - a unit specializing in researching the macro situation and the Vietnamese market - still believes that the State Bank still has room to regulate exchange rates from now until the end of the year. , the exchange rate may soon cool down again and end the year with an increase not exceeding 3.5% - 4% ytd.

The theoretical basis that Vietdata gives is that the demand for USD in the free market is not too intense. The evidence is that for nearly 2 months, the selling rate on the free market has always been lower than in banks, and the difference between selling and buying rates in banks is also higher. Foreign exchange reserves are currently higher than at the end of 2022. Trade surplus and remittances to Vietnam still remain positive. In addition, the State Bank also sent a message that it will try to stabilize the currency market, foreign currencies and exchange rates fluctuate around 3.9%, a level considered reasonable compared to other countries in the region.

Source: VIETNAM MACRO AND INDUSTRY REPORT - SEPTEMBER 2023