USD rises against forecast
The dollar fell on Friday but still posted a third straight weekly gain, as investors bet on higher interest rates for longer to curb inflation and anxiously awaited a resolution to the final U.S. debt ceiling negotiations.
Apparent progress on Thursday in talks between President Joe Biden and Republican Senator Kevin McCarthy helped ease jitters, but markets remained on edge about any risk of default ahead of the long U.S. banking weekend.
“Monday is a bank holiday in the US, so market participants will have to wait until Tuesday, May 30, to re-trade positions, so there is a strong belief that Washington needs to make a deal today,” said currency analysts at MUFG.
Concerns that the US could default on its debt have led investors to believe that the US dollar would fall in value. However, the greenback surprisingly surged. Illustrative photo
Wall Street traders have become increasingly wary of U.S. government debt securities, but the prospect of an imminent deal helped lift sentiment across markets on Friday and boosted more risk-sensitive currencies at the expense of the dollar.
The U.S. dollar index, which tracks the greenback against six major currencies, was last down 0.05% on the day at 104.20, just off Thursday's two-month high of 104.31. However, it was on track for a weekly gain of about 0.8%. That put the greenback on track for its third straight weekly gain.
The dollar's recent rally has also been fueled by growing expectations that the Federal Reserve will have to keep interest rates higher for longer to curb inflation.
Money markets are now pricing in a 42.5% chance that the Fed will deliver another 25 basis point rate hike at its policy meeting next month, while expectations that the Fed will start cutting rates later this year have been scaled back.
The dollar edged off a six-month high against the yen and stood at 139.67, after hitting 140.23 yen in the previous session, its highest since November.
The euro and sterling have recovered somewhat, but are struggling to make up for recent losses against the dollar.
Croatian policymaker Vladimir Vujcic said it was still unclear whether the European Central Bank would be able to lower price growth to its 2% target within two years and inflationary pressures remained persistent in the bloc.
The currency was last up 0.07 percent against the dollar at $1.0727, but not far from a two-month low of $1.0708 hit in the previous session.
Sterling rose 0.23% to $1.2349, after data showed British consumers increased spending in April, although the currency was still headed for a weekly loss.
Stable USD/VND exchange rate
Despite the US dollar in the world market recording a third consecutive week of significant increases despite concerns about the possibility of a US debt default, the USD/VND exchange rate is relatively stable in the domestic market.
In the banking market, most of the USD prices increased slightly. Only a few places had a negligible impact on the exchange rate.
After many slight daily fluctuations, at the end of the week, the USD/VND exchange rate at the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) was listed at: 23,290 VND/USD - 23,660 VND/USD, unchanged from the end of last week.
Meanwhile, most of the remaining units increased USD prices.
At Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank), the exchange rate is traded at: 23,232 VND/USD - 23,692 VND/USD, an increase of 22 VND/USD in both buying and selling directions, equivalent to 1%.
At the Bank for Investment and Development of Vietnam (BIDV), the USD/VND exchange rate closed the week at 23,330 VND/USD - 23,630 VND/USD, up 10 VND/USD. The Vietnam Export Import Commercial Joint Stock Bank (Eximbank) adjusted the exchange rate up 10 VND/USD to 23,250 VND/USD - 23,630 VND/USD after a week of trading.
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