UOB: VND regains recovery momentum from Q4/2025

According to the Vietnam economic growth forecast for Q2/2025, conducted by the Global Market and Economic Research Department of UOB Bank (Singapore), the VND will continue to fluctuate in a weak range against the USD until the end of Q3/2025. However, from Q4/2025 onwards, the VND may begin to regain its recovery momentum.

According to UOB analysts, Vietnam's economic activity has rebounded thanks to the 90-day tariff deferral period, with exports and imports in April increasing more sharply than expected compared to the same period last year, reaching 20% ​​and 23% respectively. This growth was mainly due to businesses ramping up transactions before the end of the tariff deferral period. Exports to the largest market, the United States, surged 34% year-on-year, the fastest increase since January 2024.

However, amidst the uncertainty surrounding tariff policies, UOB maintains a cautious view on Vietnam's prospects, given the economy's heavy reliance on trade (exports account for approximately 90% of GDP), with the US market alone accounting for about 30% of total export value.

In addition, exports are highly concentrated in key sectors such as electrical and electronics, furniture, textiles, and footwear (accounting for approximately 80% of total export value to the US).

“We maintain our forecast for Vietnam’s full-year economic growth at 6.0% in 2025 and 6.3% in 2026. Specifically for the second and third quarters of 2025, GDP growth is projected to reach 6.1% and 5.8% respectively,” UOB experts stated.

According to UOB, inflation in Vietnam has somewhat cooled, standing at around 3.1% year-on-year in both March and April, down from the average of 3.6% in 2024 and 3.26% in 2023, while still remaining below the 4.5% target. The mild inflation environment, coupled with rising global trade tensions and tariff uncertainties, opens the possibility of the State Bank of Vietnam easing monetary policy.

However, unlike some neighboring countries in the region, the current weakening of the Vietnamese Dong (VND) exchange rate is a factor that the State Bank of Vietnam must consider. In the current context, UOB research experts forecast that the State Bank of Vietnam will keep its policy interest rates unchanged, with the refinancing rate remaining at 4.50%.

Furthermore, if domestic business conditions and the labor market weaken significantly, UOB expects the State Bank of Vietnam to lower the one-time refinancing rate to the Covid-19 low of 4.00%, and then potentially reduce it by another 50 basis points to 3.50%, provided the foreign exchange market remains stable and the US Federal Reserve (Fed) implements interest rate cuts.

"At the moment, our base case scenario remains that the State Bank of Vietnam will keep policy interest rates unchanged," UOB experts stated.

The UOB report also highlighted that the Vietnamese Dong (VND) is one of the weakest currencies in the region, amidst a general recovery of Asian currencies in the second quarter of 2025. Since the beginning of the quarter, the VND has depreciated by 1.8%, reaching a new record low of approximately 26,000 VND/USD.

“This weakness stems primarily from a less positive economic outlook – we have lowered our 2025 GDP growth forecast to 6.0%, from 7.09% in 2024 – along with the increased risk of the US reimposing the 46% tariffs announced on ‘Liberation Day’ if US-Vietnam trade negotiations do not make significant progress. These factors are expected to continue putting pressure on the VND in the short term,” UOB experts further analyzed.

Therefore, UOB also believes that the VND will continue to fluctuate in a weak price range against the USD until the end of Q3 2025. However, from Q4 2025 onwards, the VND may begin to regain its recovery momentum, aligning with the general improvement trend of Asian currencies as trade uncertainties gradually ease.

UOB has updated its USD/VND exchange rate forecast to 26,300 in Q3 2025, 26,100 in Q4 2025, 25,900 in Q1 2026, and 25,700 in Q2 2026.

HONG ANH

Source: https://nhandan.vn/uob-vnd-lay-lai-da-phuc-hoi-tu-quy-42025-post885828.html