The unknown of USD/VND exchange rate under Trump 2.0

US monetary policy is one of the big unknowns affecting the USD/VND exchange rate.

US monetary policy is one of the big unknowns affecting the USD/VND exchange rate.

US monetary policy question mark

Sharing in the discussion session Decoding variables at the Workshop "Investment 2025: Decoding variables - Identifying opportunities" organized by Investment Newspaper, the story of monetary policy in the US is especially hot when next week the US Federal Reserve (Fed) will hold the final interest rate decision meeting of the year.

According to Mr. Hoang Quoc Anh, Investment Director of GHGInvest, the development of the 2-year Treasury bond interest rate, a factor that often has a high correlation with the Fed's interest rate management decisions after the recently announced CPI data for November 2024, shows a high possibility that the Fed will have a third interest rate cut with a reduction of 25 basis points. Investors are also betting the most on this possibility.

Mr. Hoang Quoc Anh, Investment Director of GHGInvest

However, with a not-so-optimistic view on the global context next year, Dr. Nguyen Tri Hieu, Director of the Institute for Research and Development of Global Financial and Real Estate Markets, predicts that US interest rates will increase, leading to a shift in the Fed's monetary policy. The reason for this shift is the possibility that the world's No. 1 economy may face the risk of rising inflation again.

In Mr. Trump's second term as President, this expert is concerned that the price of goods will increase after the imposition of taxes. At the same time, Mr. Hieu believes that Trump's new immigration policy will cause a shortage in the US labor market; Mr. Trump's tax reduction policy for the rich will increase the US budget deficit. This leads to the possibility that the US government will be forced to issue bonds with high interest rates to balance the budget. "With the above factors, I predict that US interest rates will increase, leading to a shift in the Fed's monetary policy," Mr. Hieu emphasized.

Mr. Trinh Ha, strategy expert, Exness Investment Bank

Meanwhile, Mr. Trinh Ha, a strategist at Exness Investment Bank, said that Mr. Trump's policies will follow a certain roadmap. The positive point is that the Fed is expected to continue cutting interest rates in 2025. Sharing the same view on inflation risks, Mr. Ha also mentioned measures to loosen oil and gas exploitation under Trump 2.0, a factor that could affect oil and gas prices, thereby reducing inflationary pressure. This expert said that the interest rate rate could decrease compared to previous forecasts, with the long-term neutral interest rate possibly being higher than 3-3.5%.

Pressure on USD/VND exchange rate

According to Dr. Nguyen Tri Hieu, the increase in the value of the dollar puts pressure on the exchange rate. This expert predicts that the USD/VND exchange rate has increased by 4.5% so far, may increase by 5% throughout the year and will continue to fluctuate in an upward direction and depend heavily on the US monetary policy.

Sharing the same view, Mr. Barry Weisblatt David, Director of Analysis, VNDirect Securities Corporation, also said that the inflation risk from Mr. Trump's policy is also changing the company's forecasts when building the base scenario. With the DXY index anchored high, the USD/VND exchange rate will be under a lot of pressure. Mr. Barry Weisblatt David also left open the risk that the State Bank will have to increase interest rates if the exchange rate pressure gets out of control.

With the possibility of the dollar maintaining its strength, Mr. Trinh Ha believes that there is increasing pressure on the exchange rate. However, in the short term, the DXY index measuring the strength of the greenback is at 106 - 107 points, reflecting investors' expectations and has been pushed up somewhat too high. When eliminating the year-end seasonal factor, the cooling inflation will relieve some of the pressure on the dollar.

Despite the unpredictable risks from President-elect Donald Trump's trade policy messages, the expectation of growth in export activities and the economy is an internal factor that positively impacts the exchange rate. Regarding the story of President-elect Donald Trump's new tariff policy, Mr. Quoc Anh recalled that during Mr. Trump's first term 4 years ago, when China was taxed by the US at 60-100%, the Vietnamese market received positive impacts. At that time, according to the Investment Director of GHGInvest, exports to the North American market accounted for 40% of Vietnamese goods.

For the Chinese market, for the first time in 14 years, China has pledged to loosen monetary policy to support growth. The signal shows that China will have strong stimulus through fiscal policy, lowering interest rates to promote economic growth. As a neighboring country, Vietnam also benefits. In that context, Mr. Quoc Anh believes that Vietnam's economy is facing positive opportunities from both the US and China.

Regarding the domestic market, the representative of GHGInvest said that Vietnam is working very hard on restructuring both the public and private sectors. "I feel very optimistic and expectant of the Vietnamese market," said Mr. Quoc Anh. In addition, the domestic market also shows a more positive sentiment. As a company that measures purchasing power, attitudes and behaviors of customers, NielsenIQ Vietnam has assessed the pressure on consumers including factors: economic and financial factors of consumers, actual daily spending levels and comfort levels with life.

Ms. Dang Thuy Ha, Director of Customer Behavior Research and Representative of Northern Region, NielsenIQ Vietnam

Ms. Dang Thuy Ha, Director of Customer Behavior Research and Representative of Northern Region of NielsenIQ Vietnam, said that NielsenIQ's research shows that up to 67% of Vietnamese people believe that their financial situation is improving, this figure is more than 50% at the time of 1 year ago. This data shows the change in income, and also shows the belief in economic recovery.

According to Ms. Ha, the bright spots in import and export, FDI investment, and public investment will promote consumer behavior in Vietnam. Survey data from NielsenIQ Vietnam shows that about 35% of respondents believe in economic growth of over 6.5%, 45% believe in growth of 5.5-6.5%, and only about 20% are not very optimistic with less than 5.5%.

Source: https://baodautu.vn/an-so-ty-gia-usdvnd-duoi-thoi-trump-20-d232452.html