Review of economic information for the week of March 17 - 21

Economic news review

Domestic market summary from March 17 to 21

In the foreign exchange market during the week of March 17-21, the central exchange rate was adjusted by the State Bank in an upward trend. At the end of March 21, the central exchange rate was listed at 24,813 VND/USD, an increase of 34 VND compared to the previous weekend session.

The State Bank of Vietnam listed the USD buying price at 23,623 VND/USD, 50 VND higher than the floor rate; while the USD selling price was listed at 26,003 VND/USD, 50 VND lower than the ceiling rate.

Interbank exchange rates during the week from March 17 to 21 fluctuated upward in most sessions. At the end of the session on March 21, the interbank exchange rate closed at 25,620, up 110 VND compared to the previous weekend session.

The dollar-dong exchange rate in the free market last week also followed an upward trend. At the close of the session on March 21, the free exchange rate increased sharply by 130 VND in both buying and selling directions compared to the previous weekend session, trading at 25,870 VND/USD and 25,970 VND/USD.

Interbank money market from March 17 to 21, interbank VND interest rates for terms of 1 month or less decreased in the first 4 sessions of the week and then increased quite strongly in the last session of the week. Closing on March 21, interbank VND interest rates were traded at: overnight 4.22% (-0.08 percentage points); 1 week 4.38% (-0.05 percentage points); 2 weeks 4.50% (-0.03 percentage points); 1 month 4.54% (-0.07 percentage points).

Interbank USD interest rates remained slightly volatile across all terms last week. On March 21, interbank USD interest rates were traded at: overnight 4.30% (unchanged); 1 week 4.38% (unchanged); 2 weeks 4.45% (+0.01 percentage point) and 1 month 4.49% (-0.01 percentage point).

In the open market from March 17 to 21, in the mortgage channel, the State Bank offered VND195,000 billion for four terms of 7 days, 14 days, 35 days and 91 days, with interest rates kept at 4.0%. VND70,842.65 billion was won and VND76,252.16 billion matured last week in the mortgage channel.

The State Bank of Vietnam did not offer SBV bills for auction. There was no volume of bills maturing last week.

Thus, the State Bank of Vietnam withdrew a net VND5,409.51 billion from the market last week through the open market channel. There were VND80,849.26 billion circulating on the mortgage channel, there were no more State Bank bills circulating on the market.

On the bond market on March 19, the State Treasury successfully bid VND20,233 billion/VND23,000 billion of government bonds called for bid (winning rate reached 88%). Of which, the 5-year term mobilized the entire VND4,000 billion called for bid, the 10-year term mobilized VND16,123 billion/VND18,000 billion called for bid, the 15-year term mobilized VND110 billion/VND500 billion called for bid. The 30-year term called for VND500 billion but there was no winning volume. The winning interest rate for the 5-year term was 2.15% (+0.05 percentage points compared to the previous auction), the 10-year term was 2.96% (unchanged), the 15-year term was 3.0% (unchanged).

On March 26, the State Treasury plans to bid VND13,000 billion in government bonds, of which VND500 billion will be offered for 5-year terms, VND11,500 billion for 10-year terms, and VND500 billion for 15-year and 30-year terms.

The average value of Outright and Repos transactions in the secondary market last week reached VND20,026 billion/session, a sharp increase compared to VND14,161 billion/session of the previous week. Government bond yields last week fluctuated slightly downward in most maturities except for the 30-year term. At the close of the session on March 21, government bond yields were trading around 1-year 2.08% (-0.01 percentage point compared to the session at the end of last week); 2-year 2.09% (-0.01 percentage point); 3-year 2.16% (-0.004 percentage point); 5-year 2.30% (-0.02 percentage point); 7-year 2.64% (-0.04 percentage point); 10-year 2.96% (-0.01 percentage point); 15-year 3.15% (-0.005 percentage point); 30 years 3.41% (unchanged).

Stock market from March 17 to 21, the stock market tends to decrease after increasing in the first session of the week. At the end of the session on March 21, VN-Index stood at 1,321.88 points, down sharply by 14.38 points (-0.32%) compared to the end of the previous week; HNX-Index increased by 3.09 points (+1.27%) to 245.82 points; UPCoM-Index decreased by 0.06 points (-0.06%) to 99.32 points.

Average market liquidity is quite high, reaching over VND20,900 billion/session. Foreign investors continue to net sell more than VND2,700 billion on all three exchanges.

International News

The US Federal Reserve (Fed) had an important meeting last week. In the meeting on March 18-19, the Federal Open Market Committee (FOMC, under the Fed) forecast that US GDP will only increase by 1.7% in 2025 (-0.4 percentage points compared to the forecast in December 2024). The Fed slightly raised its unemployment rate forecast to 4.4% (+0.1 percentage points).

In terms of inflation, the total PCE and core PCE are forecast to be 2.7% and 2.8% this year (+0.2 percentage points and +0.3 percentage points), respectively. The Fed kept the policy interest rate unchanged at 4.25% - 4.5% at this meeting, and at the same time did not change the roadmap for cutting 0.5 percentage points (equivalent to 2 times 0.25 percentage points) this year. In the long term, the FOMC forecasts that the US GDP will increase by about 1.8%/year in the coming years, the unemployment rate will stabilize at 4.3%, and both PCE and core PCE inflation will gradually cool down, reaching the target of 2.0% in 2027. The policy interest rate is also forecasted to be cut gradually each year by the FOMC, to around 3.4% in 2026; 3.1% in 2027 and longer term at 3.0%.

After the meeting, Fed Chairman Jerome Powell said that most measures showed that the inflation outlook remained consistent with the 2.0% target over the long term. The increase in inflation this year, largely due to tariffs, could be “temporary”, but it is uncertain and needs to wait for further market developments. The Fed is in no rush to adjust its stance, and could cut rates if the labor market or inflation weakens unexpectedly, or could tighten for longer if inflation does not continue to move towards the target in a sustainable manner.

The US recorded several notable economic indicators. First, total retail sales and core retail sales in the country increased by 0.2% and 0.3% respectively compared to the previous month in February after falling by 1.2% and 0.6% in January (revised down from the 0.4% and 0.9% declines in the preliminary report), both worse than the forecast of 0.6% and 0.3% increases. Compared to the same period in 2024, total retail sales increased by 3.1%, narrowing from the 3.9% increase in January.

Next, in the construction and real estate market, the number of building permits in the US reached 1.46 million in February, unchanged from the previous month's 1.47 million, slightly higher than the forecast of 1.45 million. In addition, the number of housing starts in the country reached 1.50 million in February, up sharply from 1.35 million in January and at the same time exceeding the expected level of 1.38 million. Sales of existing homes in the US reached 4.26 million in February, higher than the 4.09 million in January and at the same time higher than the forecast of 3.95 million.

Finally, on the labor market, initial jobless claims in the US for the week ending March 14 were 223,000, up from 221,000 the previous week and in line with the forecast of 224,000. The four-week average was 227,000, down slightly by 0.75 thousand from the previous four-week average.

The Bank of Japan (BoJ) and the Bank of England (BOE) also kept their policy rates unchanged at their March meetings. Regarding the BoJ, on March 19, the agency assessed that Japan's economy has recovered moderately in recent times, although some sectors are still weak. In addition, inflation may return to stability near the agency's target of 2.0%. The BoJ decided to keep its policy rate (the interest rate at which credit institutions deposit money overnight at the BoJ) unchanged at 0.50% at its recent meeting due to concerns about uncertainties surrounding Japan's economic performance, especially the trade tariff policies of new US President Donald Trump.

In the UK, the BOE said on March 20 that the country had made progress in reducing inflation. However, trade uncertainty has increased since the US introduced a series of tax policies and governments responded. Headline CPI in the UK in January rose to 3.0% year-on-year from 2.5% the previous month, with the BOE forecasting a further climb to 3.75% by the third quarter of 2025. Although inflation is expected to ease back after that, the BOE will closely monitor any signs of a more persistent inflation outlook.

At this meeting, the BOE Monetary Policy Committee (MPC) voted by a majority in favor of maintaining the policy interest rate at 4.5%, unchanged from before.