Bank USD increases sharply, about to catch up with free USD

Bank USD is about to catch up with free USD

In the morning session of January 11, the foreign exchange market was quite calm when the USD/VND exchange rate fluctuated within a narrow range. However, in the afternoon, the heat began to blow into the market when the USD suddenly increased sharply in the banking system and was about to catch up with the USD in the free market.

After many adjustments, by the end of the afternoon of January 11, the USD/VND exchange rate at the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) was listed at: 24,295 VND/USD - 24,635 VND/USD, an increase of 80 VND/USD in both buying and selling compared to the end of yesterday.

The USD/VND exchange rate at Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) is exchanged at: 24,315 VND/USD - 24,655 VND/USD, up 97 VND/USD for buying, up 17 VND/USD for selling.

The strong increase in the bank USD is about to catch up with the free USD, picture 1 — On the afternoon of January 11, the USD suddenly increased sharply in the banking system and is about to catch up with the USD in the free market. Illustrative photo

Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) is listing the USD at: 24,320 VND/USD - 24,620 VND/USD, an increase of 60 VND/USD in both buying and selling directions.

Vietnam Bank for Agriculture and Rural Development (Agribank) adjusted the USD/VND exchange rate up 60 VND/USD for selling and up 55 VND/USD for buying to 24,250 VND/USD - 24,570 VND/USD.

At commercial banks, the greenback also heated up clearly.

Vietnam Technological and Commercial Joint Stock Bank (Techcombank) listed the USD/VND exchange rate at 24,328 VND/USD - 24,638 VND/USD, an increase of 68 VND/USD in both buying and selling directions.

On the contrary, in the free market, the USD is going down. In Hang Bac and Ha Trung - the "foreign currency streets" of Hanoi, the USD/VND exchange rate is commonly traded at 24,650 VND/USD -24,700 VND/USD. At different stores, the difference can fluctuate around 10 VND/USD.

It can be seen that in the second half of 2023, the market witnessed a situation where free USD was much higher than bank USD. However, at present, this gap is being shortened. In other words, bank USD is about to catch up with free USD.

USD “tightens” Japanese Yen

The yen tightened on Thursday, pressured by sluggish Japanese wages, while the dollar steadied as traders awaited U.S. inflation data to see whether bets on a rate cut were justified.

The yen fell 0.9% against the dollar overnight and fell 1.2% against the euro after data showed real wages fell for a 20th straight month in November - confusing officials eager to see wages rise before tightening policy.

The yen was under slight pressure at 145.55 per dollar in morning trade and hit a six-week low of 159.99 per euro.

The dollar has stabilized in early 2024 after sliding in the final months of 2023 as the US Federal Reserve said it was ending interest rate hikes and traders priced in a sharp cut.

While that price has since eased slightly, futures still show the market sees a 140 basis point (bps) cut this year and a two-thirds chance they will start as soon as March - a view that could be challenged if inflation surprises at high levels.

New York Fed President John Williams said Wednesday it was too early to call for an interest rate cut as the central bank still has some way to go to get inflation back to 2%.

Core inflation is forecast to have eased to 3.8% year-on-year in December, the slowest pace since early 2021.

“Despite the correction in market prices this year, in our view investors remain overly optimistic about Fed rate cuts,” said Jane Foley, senior FX strategist at Rabobank.

“We expect this outlook to adjust further and therefore expect the dollar to receive some support over a one- to three-month period,” she said, as the euro faces pressure from a weakening German economy.

“We see the potential for euro/dollar to fall to $1.05 in three months, before the impact of Fed rate cuts increases risk appetite and weakens the dollar in the second half of the year,” Jane Foley forecasts.

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