Exchange rate remains high despite USD decline

DXY index hits 3-year low amid tariff uncertainty

The DXY index maintained a sharp decline throughout the month under the pressure of the tariff spiral. Specifically, April 2 was declared by President Trump as “Liberation Day” of the United States with the imposition of large-scale reciprocal tariffs on many trading partners, including raising tariffs on imported goods from China to 145%. However, he decided to temporarily postpone the imposition of reciprocal tariffs for 90 days.

In addition, the downward pressure on the USD increased as President Trump continuously criticized and put pressure on the Federal Reserve with the intention of removing the Fed Chairman. In this context, the DXY index hit a three-year low of 98.3 on April 21 (-10.2% compared to the beginning of the year).

On the economic front, the US manufacturing sector continued to contract for the second consecutive month, with the ISM PMI index reaching 48.7 points in April as supply chains were affected by new tariffs. Inflation cooled slightly, with the PCE index rising 2.3% y/y in March, down from 2.7% in February. Meanwhile, consumer spending recorded its fastest increase in more than two years as households stepped up shopping activities before the new tariffs were implemented.

Faced with many uncertain risks and a gloomy economic outlook, the US consumer sentiment index fell to its second lowest level since 1952. Accordingly, the USD fell 4.8% in the month to 99.2 at the end of April (-9.3% compared to the beginning of the year).

Exchange rate remained high throughout the month despite the decline of the USD

Although the DXY index has fallen sharply by 9.7% from its peak in 2025, the interbank USD/VND exchange rate remained high in April. Experts at MBS said that the high exchange rate was partly due to the following factors: First, in April, the State Treasury continued to buy USD from commercial banks with a total value of 110 million USD, which also somewhat tightened the foreign currency supply. Second, in the context of the trade situation facing many uncertainties related to unpredictable tariff policies from the US, businesses' demand for foreign currency often tends to increase. Finally, the sharp drop in interbank interest rates to a 13-month low at the end of the month caused the VND-USD interest rate gap to reverse to the negative level at the highest level since the beginning of the year.

Accordingly, the interbank exchange rate increased by 1.4% compared to the end of March to 25,994 VND/USD (+2.1% compared to the beginning of the year). The exchange rate on the free market increased to 26,470 VND/USD, while the central exchange rate was listed at 24,956 VND/USD, corresponding to increases of 2.8% and 2.5% respectively compared to the beginning of 2025.

MBS expects the exchange rate to fluctuate in the range of VND25,500 – 26,000/USD in 2025 as the new administration’s fiscal easing plans, combined with tighter immigration policies, along with high interest rates and relatively high protectionism in the US, are expected to support the increase in the value of the USD in 2025. In addition, unpredictable tariff policies from the US are expected to create many challenges for Vietnam’s export activities and FDI attraction in the coming time and may put pressure on Vietnam’s already modest foreign exchange reserves after having to sell more than US$9 billion last year.

However, so far, internal factors are still recording positive results such as: trade surplus (~3.79 billion USD in 4M2025), disbursed FDI capital (6.74 billion USD, +7.3% yoy) and recovery of international tourist arrivals (+23.8% yoy in 4M2025). Accordingly, this is expected to continue to support the VND.

Source: https://baodaknong.vn/ty-gia-van-neo-o-muc-cao-du-dong-usd-suy-giam-251744.html