USD exchange rate ends consecutive weeks of increase

While the central exchange rate continued to increase for the fourth consecutive week, the exchange rate at banks decreased, ending many consecutive weeks of price increases. The decrease in the exchange rate has helped the foreign exchange market cool down.

Forecasts indicate a decline in the USD exchange rate in the second half of the year.

At the close of trading last week (July 11th), the State Bank of Vietnam announced the central exchange rate at 25,128 VND/USD, a decrease of 3 dong compared to the previous session. With a margin of +-5%, the ceiling exchange rate is 26,384 VND/USD and the floor exchange rate is 23,872 VND/USD.

The reference exchange rate at the State Bank of Vietnam's Exchange Transaction Department is 23,922 VND/USD (buying) and 26,334 VND/USD (selling). Meanwhile, the exchange rate listed at commercial banks is around 25,900 VND/USD (buying) - 26,290 VND/USD (selling). On the free market, the exchange rate is trading at 26,400 VND/USD (buying) - 26,490 VND/USD (selling).

Thus, from July 7th to July 11th, the central exchange rate increased by 12 dong, while the exchange rate at commercial banks decreased by approximately 60 dong in both buying and selling directions.

Following the trend of commercial banks, the exchange rate also decreased by 30 dong in the free market. Prior to this, the free market exchange rate had increased by 195 dong in the previous week.

The exchange rate reversed and started to fall. (Illustrative image)

On the international market, the DXY index, which measures the "health" of the US dollar against six other major currencies in the currency basket, stood at 97.74 points, up 0.8% from last week's closing level. Thus, the US dollar is gradually recovering slightly after falling 12% in the first half of the year, the largest drop since 1973.

Experts believe that the US dollar is under pressure from U.S. policies as the budget deficit continues to grow. And perhaps most worrying is the inconsistency and unpredictability of tariff policies.

Experts at MB Securities Joint Stock Company (MBS) predict that the US dollar is expected to continue to fall from now until the end of the year as the US Federal Reserve (FED) is expected to begin cutting interest rates, and domestic issues will be the main factor contributing to increased pressure on the exchange rate.

The VND-USD interest rate differential may continue to widen as deposit rates still have room to fall in the third quarter, while the federal funds rate is projected to only decrease from September due to the stable US labor market and persistent inflationary pressures.

In fact, a crucial buffer for the USD/VND exchange rate is exports, which are projected to slow down as most businesses complete deliveries before the tariff deferral deadline (July 9th), potentially leading to a decrease in international demand in the coming period. The exchange rate is forecast to fluctuate between 26,600 and 26,750 VND/USD by the end of the year, representing a 4.5-5% increase compared to the beginning of the year.

Other foreign currencies also experience significant fluctuations.

Regarding other foreign currencies, at Vietnam Foreign Trade Commercial Bank ( Vietcombank ), the EUR reversed its upward trend and fell sharply, closing the week at 30,052 VND/EUR (buying) - 30,076 VND/EUR (selling), a decrease of 337 dong in the buying rate and 367 dong in the selling rate compared to the previous week.

Meanwhile, the British Pound (GBP) is quoted at 34,476 VND/GBP (buying) - 35,939.89 VND/GBP (selling), a decrease of over 400 VND in both directions; the Japanese Yen (JPY) is 171.69 VND/JPY (buying) - 182.6 VND/JPY (selling).

The State Bank of Vietnam continues to flexibly manage open market operations, ensuring liquidity for the system. Accordingly, interbank interest rates edged up last week after a sharp decline the previous week. Specifically, on July 9th, the overnight rate increased sharply by 0.57%, to 4.65%/year; the 1-week rate also increased by 0.4%, to 4.65%/year; the 2-week rate increased to 4.72%/year, up 0.47%; the 1-month rate increased by 0.49% to 4.91%/year; and the 3-month rate increased to 4.75%, the smallest increase of 0.15%/year.

Regarding the open market, last week, in the collateralized lending channel, the State Bank of Vietnam offered 7-day and 91-day maturities at an interest rate of 4% per annum. A total of VND 71,096.25 billion was successfully bid for in both maturities; VND 61,705 billion matured in the collateralized lending channel.

The State Bank of Vietnam offered 7-day treasury bills for auction, with interest rates ranging from 3.35% to 3.45% per year. As a result, 21,400 billion VND worth of treasury bills were successfully auctioned at these rates, while 17,400 billion VND of bills matured.

According to experts, the treasury bill channel was restarted at the end of June to raise interbank interest rates and support the exchange rate. In reality, overnight interbank interest rates have continuously maintained a sharp downward trend, even hitting a 15-month low of 1.3% per annum on June 23.

Thus, the State Bank of Vietnam injected a net amount of VND 5,391.59 billion into the market last week through the open market channel. VND 104,001.2 billion was outstanding in the collateralized lending channel, and VND 21,400 billion of State Bank bills were outstanding in the market.

Source: https://hanoimoi.vn/ty-gia-usd-cham-dut-nhieu-tuan-tang-lien-tiep-708896.html