(NLDO)- In its latest economic update report, Standard Chartered forecasts that the USD will increase strongly in 2025 but will weaken in the early part of the year.
Standard Chartered Bank has just forecasted that Vietnam's GDP will grow strongly by 6.7% in 2025 (in the first half of the year, it increased by 7.5% compared to the same period last year and in the second half, it increased by 6.1%).
Mr. Tim Leelahaphan, Economist for Thailand and Vietnam, Standard Chartered
The US dollar is expected to strengthen in the second half of 2025 as the tariff policies and fiscal measures under President Trump’s second term are clarified and implemented. In the long term, the sustainability of macro stimulus measures will affect the strength of the US dollar. Domestic and foreign investors may shift to assets that can hedge against inflation if the uncertainty persists.
The US dollar could face a period of weakness in early 2025 due to continued Fed rate cuts and uncertainty over policy implementation. The lingering effects of higher interest rates and a stronger US dollar from October 2024 could put further pressure on the currency.
The recent interest rate cut by the Fed is expected to support Asian currencies, including the Vietnamese dong. However, better-than-expected US economic data has added pressure to the Asian foreign exchange market. Factors such as trade policy uncertainty and possible inflationary measures under President Donald Trump could undermine the stability of monetary policy in the region.
According to Standard Chartered economists, Vietnam is still achieving good growth. Exports increased by 14.9% year-on-year in the first 10 months of 2024, while imports increased by 16.8%; with the electronics import-export sector continuing to recover. Solid growth in the manufacturing sector and appropriate monetary policy have also contributed to the economic recovery since the beginning of the year. Foreign investment continues to increase. Disbursed FDI increased by 8.8% year-on-year while committed FDI increased by 1.9% in the same period. The manufacturing sector accounted for 62.6% of total committed FDI during that period, while the real estate sector accounted for 19.0%, an increase compared to the same period last year.
"We expect the State Bank of Vietnam (SBV) to raise interest rates by another 50 basis points in 2Q25. The government's expectations of strong economic growth are supporting the current low interest rates. Inflation may pick up again starting from 2Q25; therefore, we expect interest rates to return to normal in 2Q. The Fed's moves will also be a key factor influencing SBV's monetary policy decisions. Lower USD interest rates could help reduce capital outflows, while a sustained trade surplus and strong foreign exchange earnings from tourism will support the VND; however, low import reserves remain a challenge," said Tim Leelahaphan, Economist for Thailand and Vietnam at Standard Chartered.
Standard Chartered forecasts that the Fed's interest rate cut could lead to a weakening trend of the USD in the next few quarters, resulting in a USD/VND exchange rate of 25,250 by the end of 2024 and 25,450 in the second quarter of 2025.
The Asian Development Outlook (ADO) report released by the Asian Development Bank (ADB) on December 11 emphasized that changes in US trade, fiscal and immigration policies could reduce growth and increase inflation in developing Asia and the Pacific.
Under the high-risk scenario, ADB forecasts that strong US policy changes could reduce global economic growth by a cumulative 0.5 percentage point over the next four years.
Vietnam’s growth forecast is revised up to 6.4% from the previous forecast of 6% in 2024; and to 6.6% from 6.2% in 2025. Stronger-than-expected trade, a strong recovery in manufacturing exports, and continued fiscal support have boosted economic growth. Amid rising external headwinds, increased public investment and supportive fiscal and monetary policies are needed to further stimulate domestic demand.
Source: https://nld.com.vn/du-bao-xu-huong-dong-usd-trong-nam-2025-196241212111051848.htm
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