State Bank comments on exchange rates, interest rates, gold in the second half of the year

On the morning of July 8, the State Bank held a press conference to inform about the results of banking activities in the first 6 months of 2025. Deputy Governor Pham Thanh Ha said that in the first months of 2025, the global economy grew more slowly, affected by many new factors, from rapidly changing tariff policies to increasing geopolitical tensions. Potential risks in the world financial and monetary markets put pressure on the management of domestic monetary policy, exchange rates, and interest rates as well as the implementation of the goal of supporting economic growth of 8% or more in 2025.

In the context of the unpredictable international economic and political situation, the State Bank has flexibly managed exchange rates, coordinated monetary policy tools to stabilize the foreign exchange market, contributing to stabilizing the macro-economy and controlling inflation. As a result, the foreign exchange market operates smoothly, the legitimate foreign currency needs of the economy are fully and promptly met; the VND exchange rate fluctuates flexibly, in accordance with market conditions.

Mr. Pham Chi Quang, Director of Monetary Policy Department.

Explaining further why the VND continued to depreciate by 2.7-2.8% against the USD in the first 6 months of the year despite the DXY index decreasing by more than 10% since the beginning of the year, Mr. Pham Chi Quang, Director of the VND Monetary Policy Department, said that to maintain the strength of the currency, first of all, the currency must be attractive, as shown in interest rates.

However, in recent times, the State Bank has implemented management policies to maintain low interest rates, supporting economic growth. Interest rates have continuously decreased since the end of 2022 until now. Since the beginning of the year, the average lending interest rate has decreased by another 0.6%/year.

"To have low interest rates, there must be certain trade-offs, including trade-offs in exchange rates," said Mr. Pham Chi Quang.

In addition, according to the leader of the Monetary Policy Department, in recent times, to support liquidity for credit institutions and help credit institutions access low interest rates, the State Bank has maintained interbank interest rates at low levels. This has led to a negative interest rate gap between VND and USD, thereby stimulating speculative demand and holding foreign currencies. This is also one of the reasons causing pressure on exchange rates.

Although Vietnam's balance of payments remains stable and the trade balance remains in surplus, cash flows are converted very quickly due to the continuous withdrawal of foreign capital from the stock market since 2024, putting great pressure on the foreign exchange market.

Regarding the developments of gold, interest rates, and exchange rates in the coming time, Mr. Pham Chi Quang said that they will be affected by many factors of the global financial market, especially the US tariff policy. Due to its large openness (Vietnam's export/GDP ratio at times reached over 200%), the US tax policy in the coming time will have a great impact not only on Vietnam's investment capital flows and export activities but also on Vietnam's major partners.

In addition, Mr. Quang said that the actions of the US Federal Reserve (Fed) in the near future will also greatly affect interest rates and exchange rates. Since the beginning of the year, the Fed has delayed interest rate cuts twice due to the Trump administration's tax policy. Although inflation in European and Japanese countries tends to decrease, inflation in the US is very unstable. Meanwhile, the US Central Bank's interest rate management policy is based on data, especially employment data. While this data has many unknowns.

Regarding gold prices, Deputy Governor Pham Thanh Ha said that in the first months of the year, world gold prices fluctuated continuously and broke records, accordingly, domestic gold prices moved in the same direction as the world. Thanks to synchronous solutions, the difference between domestic gold prices and world gold prices was basically controlled within a suitable range, about 5 million VND/tael. Currently, the State Bank is seeking opinions on amending Decree 24/2012/ND-CP on gold market management.

Source: https://baodautu.vn/nhnn-nhan-dinh-ve-ty-gia-lai-suat-vang-nua-cuoi-nam-d325788.html