Down globally, up domestically

Last night, the ECB raised interest rates, putting the USD under a lot of pressure. Therefore, it is not surprising that the greenback cooled down in the global market. However, domestically, the USD/VND exchange rate still increased in the banking system and decreased slightly in the free market.

Increase in banking system

On March 17, right from the beginning of the session, the USD "heated up" in the banking system, from state-owned to private.

The exchange rate at the Joint Stock Commercial Bank for Investment and Development of Vietnam ( BIDV ) is 23,420 VND/USD - 23,720 VND/USD, down 10 VND/USD; at the Joint Stock Commercial Bank for Industry and Trade of Vietnam (VietinBank), the exchange rate is 23,620 VND/USD - 23,762 VND/USD, up 18 VND/USD compared to the end of yesterday.

At some commercial banks, the US dollar was also adjusted upward.

Despite the sharp decline in the global market, the USD still increased significantly in the banking system. Illustrative photo

Vietnam Technological and Commercial Joint Stock Bank ( Techcombank ) adjusted the exchange rate to increase by about 18 VND/USD to 23,420 VND/USD - 23,770 VND/USD. 23,370 VND/USD - 23,750 VND/USD, an increase of 20 VND/USD.

Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcobank) is one of the few units that have not adjusted the listed price. The USD/VND exchange rate remains at: 23,380 VND/USD - 23,750 VND/USD, unchanged from yesterday. The US dollar at Vietcombank is temporarily resting after continuous trend changes this week.

At Hang Bac and Ha Trung, famous "gold streets" in Hanoi, the USD/VND exchange rate is slightly decreasing, commonly traded at 23,550 VND/USD - 23,600 VND/USD, down about 30 VND/USD compared to yesterday.

In recent months, the US dollar on the free market has fallen to a lower level than on the banking market.

Decline in global markets

The USD/VND exchange rate fell across the domestic banking system amid a decline in the dollar across global markets on Friday as risk sentiment improved after authorities and banks moved to ease financial system stress in major markets, cooling other major currencies that had slumped earlier in the week following banking turmoil.

Major U.S. banks on Thursday pumped $30 billion in deposits into First Republic Bank to rescue the lender, which is caught in a deepening crisis sparked by the collapse of two other mid-sized U.S. banks in the past week.

Cautious calm spread across markets on Friday, giving risk-sensitive currencies such as the Australian and New Zealand dollars a chance to rally. They were among the biggest gainers in Asian trading.

The $30 billion rescue package, put together by top power brokers from the U.S. Treasury, the Federal Reserve and banks, comes after Credit Suisse announced it would borrow up to $54 billion from the Swiss National Bank.

But even as the Swiss lender's shares plunged 30%, raising concerns about the health of Europe's banks, the European Central Bank (ECB) went ahead with a 50 basis point interest rate hike at its policy meeting on Thursday.

ECB policymakers have sought to reassure investors that eurozone banks are resilient and that if anything, a move to higher interest rates would boost their profit margins.

The euro reacted to the decision with a muted tone, although it did gain 0.3% on Thursday. The euro was last up 0.14% at $1.0625.

“The eurozone banking sector remains in relatively solid shape,” said Nick Bennenbroek, international economist at Wells Fargo. “If market stress eases and volatility eases in the coming weeks and months, persistent inflation will be enough to warrant further ECB tightening, in our view.”

Elsewhere, sterling rose 0.15% to $1.2128, while the Swiss franc rose 0.1%. Earlier in the week, the Swissie had its biggest one-day fall against the dollar since 2015. The Japanese yen also rose, last trading about 0.3% higher at 133.30 per dollar.

As a result, the US Dollar Index fell 0.12% to 104.27.

Expect less pressure on exchange rate

Vndirect Securities Company believes that the recent collapse of SVB Bank in the US is putting the FED in a difficult situation. On the one hand, the FED is still under pressure to increase the operating interest rate to control inflation, on the other hand, the high interest rate environment will put US financial institutions in a dangerous situation because the real value of assets is much lower than the book value (due to high interest rates causing bond prices to fall sharply).

Therefore, the market is expecting the FED to be less hawkish than before the SVB event. Accordingly, the market is currently forecasting the peak of the FED's operating interest rate (FED terminal rate) at 5 - 5.25%, lower than the forecast of 5.5 - 5.75% before the SVB event.

At the same time, the market expects the FED to start reducing operating interest rates from the fourth quarter of 2023, earlier than the previous forecast of the first quarter of 2024.

Vndirect assessed that the exchange rate pressure decreased due to the weakening of the DXY index after the SVB collapse. The DXY index fell sharply after the SVB event because the market expected the FED to be less "hawkish" about monetary policy.

“We expect exchange rate pressure to ease in Q2/2023 as the FED may deliver more dovish messages on monetary policy at its meeting next March. Accordingly, we forecast the USD/VND exchange rate to fluctuate in the range of 23,600 - 23,800 in Q2/2023,” Vndirect forecasted.

Source: https://www.congluan.vn/dong-usd-giam-tren-toan-cau-tang-o-trong-nuoc-post239611.html