The USD/VND exchange rate has surged.

Công Luận•02/08/2023

The USD/VND exchange rate has surged.

The banking system has continuously lowered deposit interest rates. This will create room for lending interest rates to become cheaper, thereby supporting businesses in overcoming difficulties.

Conversely, lower interest rates are believed to put pressure on the exchange rate.

Since the beginning of August, many banks have once again implemented a policy of reducing deposit interest rates. In response to this decision, the USD/VND exchange rate is trending sharply upward in both the banking and free markets.

The Vietnam Foreign Trade Commercial Bank (Vietcombank) is currently listing the USD/VND exchange rate at 23,560 VND/USD – 23,900 VND/USD, an increase of 40 VND/USD in both buying and selling rates compared to the end of yesterday.

USD/VND exchange rate surges in the market (Figure 1) — The USD/VND exchange rate surged in both the banking and free markets. (Illustrative image)

At the Vietnam Investment and Development Bank ( BIDV ), the USD/VND exchange rate is trading at: 23,595 VND/USD – 23,895 VND/USD. The Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) is buying and selling USD at: 23,559 VND/USD – 23,899 VND/USD.

Vietnam Export Import Commercial Bank (Eximbank) listed the USD/VND exchange rate at: 23,580 VND/USD – 23,890 VND/USD, an increase of 50 VND/USD in both directions.

The USD/VND exchange rate at Vietnam Technological and Commercial Bank (Techcombank) is currently trading at: 23,568 VND/USD – 23,903 VND/USD, an increase of 36 VND/USD.

In the free market, the US dollar also strengthened significantly.

In Hang Bac and Ha Trung – Hanoi 's "foreign exchange streets" – the USD/VND exchange rate is commonly traded at 23,700 VND/USD – 23,750 VND/USD, an increase of 50 VND/USD in both buying and selling rates compared to the end of yesterday.

Earlier in July, the US dollar had risen significantly.

According to data released by the General Statistics Office, the value of the US dollar fluctuated globally , rising and falling intermittently as inflation in the US cooled and positive news from the US labor market influenced the situation.

As of July 25, 2023, the US dollar index on the international market reached 101.07 points, down 1.86% compared to the previous month. Domestically, the average US dollar price on the free market was around 23,787 VND/USD. The US dollar price index in July 2023 increased by 0.53% compared to the previous month; decreased by 1.71% compared to December 2022; increased by 1.04% compared to the same period last year; and the average for the first seven months of 2023 increased by 2.39%.

Struggling in the Asian market

The dollar struggled to rise on Wednesday after Fitch downgraded the U.S. government's top credit rating, raising questions about the financial outlook of the world's largest economy, although it received some support from a series of relatively stable economic data.

Rating agency Fitch on Tuesday downgraded the U.S. rating to AA+ from AAA in a move that drew an angry reaction from the White House and surprised investors, despite a resolution on the debt ceiling crisis two months earlier.

That pushed the greenback lower, pushing the euro toward $1.10. The currency was last up 0.11% at $1.0996, after earlier touching a session high of $1.1020.

Similarly, the British pound rose 0.05% to $1.2782, while the US dollar index ended 0.09% higher at 102.09, after slipping following the Fitch news.

Conversely, the dollar was supported by economic data on Tuesday showing that US job growth remains consistent with tight labor market conditions, even as it fell to its lowest level in more than two years in June.

A separate report indicated that U.S. manufacturing may have stabilized at a weaker level in July amid gradually improving new orders, although factory employment fell to its lowest level in three years.

Elsewhere, the Japanese yen strengthened by about 0.1% to 143.21 per dollar.

The minutes of the Bank of Japan's (BOJ) June policy meeting, released Wednesday morning, show that BOJ leaders agreed on the need to maintain an extremely loose monetary policy for the time being.

The Australian dollar rose 0.12% to $0.6621, reversing some of the sharp 1.57% losses from the previous session after the Reserve Bank of Australia (RBA) kept interest rates unchanged.

The New Zealand dollar fell 0.23% to $0.6136 after data on Wednesday showed the country's unemployment rate hit a two-year high in the second quarter.

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