At what level will the exchange rate stabilize?

Since the beginning of 2023, the State Bank has bought more than 6 billion USD and is completely capable of intervening in exchange rates.

On September 28, the State Bank of Vietnam (SBV) announced the central exchange rate at 24,088 VND/USD, unchanged from the previous day. However, commercial banks bought at 24,260 VND/USD and sold at 24,580 VND/USD, up 50 VND/USD from the previous day.

In the international market, the USD Index increased from 101 points to 106 points, helping the USD increase in value compared to many other 6 strong currencies, including: Euro, JPY (Japanese Yen), GBP (British Pound), CAD (Canadian Dollar), SEK (Swedish Krona) and CHF (Swiss Franc).

According to BSC Securities Company, the US Federal Reserve (FED) has signaled that it may raise interest rates once more in 2023. This information has made the USD stronger in the international market.

However, the VND/USD exchange rate will not be a big problem when the SBV has room to manage thanks to the increasingly surplus trade balance and an upward trend when imports decrease sharply and exports increase (in the first 8 months of 2023, the trade balance reached 20.9 billion USD). In addition, the amount of remittances flowing into Vietnam remains stable, and foreign direct investment (FDI) flows are showing a positive trend in recent months.

In particular, since the beginning of 2023, the State Bank has bought more than 6 billion USD and can completely intervene in the exchange rate by selling foreign currency.

With the USD-VND interest rate gap in the interbank market currently at 4-5 percentage points for terms under 1 month, Dragon Capital Securities Company (VDSC) expects the FED to increase interest rates further, which will boost interest rate differential trading activities.

VDSC assessed the SBV's actions in issuing treasury bills, collecting tens of thousands of billions of VND in recent days to reduce exchange rate pressure and is re-testing the 24,500 VND/USD zone.

"The risk to the forecast is the possibility that the USD Index will increase sharply to 110 points. At that time, the State Bank may have to intervene by selling foreign currency and maintain the exchange rate at this level," VDSC commented.

Source: https://nld.com.vn/kinh-te/ti-gia-se-on-dinh-tai-muc-nao-20230928104317162.htm