2025 need to pay close attention to exchange rates

AFA Capital CEO assessed that unfavorable factors will decrease at the end of the year. Volatility - Velocity and Vietnam are the three V's that investors need to pay attention to in 2025.

Mr. Nguyen Minh Tuan, CEO AFA Capital

Sharing at the WeTalk program "What to invest in 2025?" organized by the Vietnam Wealth Advisors Community (VWA) on the morning of January 11, Mr. Nguyen Minh Tuan, CEO of AFA Capital, assessed that the global macro economy in 2025 will face great uncertainty from President Donald Trump's policies with protectionism, trade tensions and political instability that have shaken the global supply chain and investment. Developed economies such as Europe and China are expected to face many challenges. 2025 is also predicted to be a year of divergence for central banks.

AFA Capital's investment strategy report points out three V's corresponding to three main themes including Volatility - Velocity and Vietnam. In particular, Mr. Tuan emphasized that investors in 2025 will have to get used to strong volatility, requiring more necessity of portfolio management. According to Mr. Tuan, US fiscal policy and trade policy will shape the world in the future from the time Trump officially takes office on January 20.

AFA Capital presents three scenarios for tariffs in the Trump 2.0 administration. In the base case with a probability of 55%, the US will impose a 25% tariff on all Chinese goods after the investigation, 25% on Canada and Mexico, and 10% on economies with increased deficits due to trade shifts away from China (including Vietnam). In this scenario, Vietnam's exports remain positive while attracting trade shifts. However, in the negative case with a probability of 45%, the tariff applied to Chinese goods is 60% and goods from beneficiary countries is 20%, Vietnam's exports may be negatively affected by high tariffs and a decline in aggregate demand due to the trade war.

Economic landscape in 2025

At the same time, 2025 will be a year of consideration for the pace of monetary policy in countries. The US economy is expected to grow but inflation is likely to return.

Mr. Tuan believes that the Fed can keep interest rates high for a long period of time, especially in a recent statement by the Fed Chairman, who also emphasized that the path when uncertain will need to slow down.

Major central banks in the DXY basket are expected to diverge.

Meanwhile, Europe will continue to cut interest rates aggressively to boost growth. China's recovery is slow and has been hit hard by rising trade uncertainty. Therefore, the main trend will still be easing. However, China will focus more on cutting reserve requirements rather than cutting interest rates, to avoid a sharp depreciation of the CNY. With the Fed tending to cut interest rates more slowly than other major central banks, experts from AFA Capital predict that the US Dollar Index (DXY) will anchor high in the first half of 2025.

Regarding the third factor - Vietnam, Mr. Tuan assessed that the exchange rate is still an issue that needs close attention in the first quarter of 2025. With current policies affecting aggregate demand, the Trump 2.0 factor will affect imports and exports and exchange rates. At the beginning of the year, there were periods of using foreign exchange reserves to manage the exchange rate. According to Mr. Tuan, interest rates are unlikely to be low, and the exchange rate is still under a lot of pressure. To support the exchange rate, monetary policy will have less and less room. Monetary policy continues to face the story of balancing exchange rates and interest rates like in 2023 and 2024. This could lead to an increase in interest rates in the market, even though the operating interest rate does not increase. Regarding investment activities, public investment is expected to be boosted. Meanwhile, private investment has shown signs of returning but is only half of the pre-pandemic level.

As the final year of the 2021-2025 Five-Year Plan, along with many expectations for GDP and the story of upgrading the stock market, the CEO of AFA Capital predicts that 2025 will be "bad at first and good at last". Pressure from exchange rates will still remain in the first half of 2025 with Vietnam's foreign exchange reserves remaining at about 80 billion USD ( equivalent to 2.4 months of imports) , after selling 2 billion USD of intervention at the end of 2024. When foreign exchange reserves fall, it will reduce the ability of the State Bank to intervene. However, the representative of AFA Capital pointed out that unfavorable factors will decrease at the end of the year.

Source: https://baodautu.vn/ceo-afa-capital-nam-2025-can-het-suc-luu-y-ty-gia-d240263.html