Stocks "take a hit" from exchange rates

ANTD.VN - The strengthening US dollar has drawn capital out of the Vietnamese stock market, affecting the sentiment of domestic investors and leading to a series of sharp declines in the market recently.

After hitting a 14-month low of 100.4 points in late September, the DXY index (which measures the strength of the USD against major currencies) has reversed and regained its strength. The greenback's rise again defied expectations of the US Federal Reserve (Fed) to cut interest rates, supported by a series of positive economic data from the world's largest economy.

In particular, the value of the dollar was further strengthened after the victory of Donald Trump, who pursued an "America First" trade policy.

Domestically, after cooling down significantly in August and September, the USD/VND exchange rate has also rebounded. The depreciation of the VND is not only affected by the strengthening of the USD, but also by internal factors, especially the seasonal increase in foreign currency demand of businesses at the end of the year.

In addition, international debt repayment obligations worth about 1 billion USD have also increased the State Treasury's demand for USD recently.

To date, the Vietnamese Dong has depreciated by approximately 4.3% against the US Dollar since the beginning of the year, and is approaching its peak of 4.6% recorded in May.

Foreign investors intensified net selling on the Vietnamese stock market.

Under pressure from the exchange rate, foreign capital has intensified selling, despite the Vietnamese stock market moving closer to its upgrade goal. This is because, typically, when the US dollar strengthens, capital tends to withdraw from emerging markets.

According to statistics, as of November 19, foreign investors have withdrawn a net of VND92,000 billion, up to VND9,200 billion in November alone and net sold about VND4,000 billion in the last 3 sessions alone.

The continuous withdrawal of foreign capital not only creates selling pressure on the market but also affects the psychology of domestic investors. Although the number of newly opened securities accounts has continuously increased over the months, domestic cash flow has also become increasingly weak as cautious psychology is pushed up.

The VN-Index has been falling continuously and in yesterday's session (November 20) it dipped below 1,200 points before bouncing back. Despite the recovery, most experts believe that the pressure on Vietnamese stocks will remain very high in the final months of the year.

Because the net withdrawal trend of foreign investors will not be easy to reverse, even though exchange rate pressure may be regulated in the last months of the year.

Experts from MBS Securities Company believe that the exchange rate pressure will gradually cool down and reach 25,000 VND/USD by the end of this year, under positive factors such as: Positive trade surplus of 23.3 billion USD in 10 months of 2024, FDI inflows of 19.6 billion USD, up 9% over the same period and strong recovery of tourism , up 41.3% over the same period in 10 months of 2024.

The stability of the macro environment is likely to be maintained and further improved, which will be the basis for stabilizing the exchange rate in 2024. In addition, pressure on the exchange rate is expected to gradually decrease in the coming time as the Fed has started a cycle of interest rate cuts, since September it has reduced a total of 75 basis points, and is likely to continue to maintain the cuts, but at a slower pace.

Sharing the same view, KBSV Securities expects the USD/VND exchange rate to decrease to around 25,000 VND/USD, up 3.5% compared to the beginning of the year.

Supporting factors such as the strong rise in the DXY index have fully reflected the market's expectations of the impact of Mr. Trump's re-election on the USD. In the next 2 months, no specific policies will be introduced until Mr. Trump officially takes office in early 2025.

Foreign currency supply at the end of the year comes from trade surplus, disbursed FDI and year-end remittances.

However, risks remain for the exchange rate as the Fed remains uncertain about the path of interest rate cuts. Fed Chairman Jerome Powell said the strong economic growth will give policymakers more time to determine how far and how fast to cut interest rates.

Mr. Nguyen The Minh, Director of Research and Analysis for Individual Clients at Yuanta Securities, is inclined towards the scenario of the DXY index approaching the 107 zone, and the exchange rate is also at the historical peak of 25,500 VND. The expert believes that if the USD does not adjust beyond 107, the VN-Index will form a bottom.

On the positive side, US bond yields are stabilizing, the VN-Index has fallen to 1,200, and market valuations are attractive. It is expected that in the next few days, the State Bank of Vietnam will take actions such as selling USD to control the exchange rate.

Source: https://www.anninhthudo.vn/chung-khoan-ngam-don-ty-gia-post596101.antd