According to UOB's report, the USD/VND exchange rate at the end of the session on April 16 reached 25,176 VND, up 0.58% compared to the previous session, leading to a sharp increase in USD prices at commercial banks.
On the afternoon of April 16, BIDV announced the USD buying and selling prices at 25,036 - 25,346, an increase of nearly 47 VND for both buying and selling compared to the session on April 15.
Techcombank announced the USD buying and selling prices at 25,082 - 25,348 VND/USD, an increase of 85 VND for buying and 48 VND for selling compared to the session on April 15.
Agribank listed the USD buying and selling rates at 25,030 - 25,348 VND/USD. Vietcombank bought USD at 24,978 VND and sold at 25,348 VND, the highest listed price ever recorded at this bank.
Accordingly, this is the second consecutive session that the USD selling price at banks has hit the ceiling, creating great pressure on the foreign exchange market exchange rate.
According to the representative of BIDV research team at the Consultation Workshop for the report “Vietnam Financial Market 2023 and Prospects 2024”, the main reason why the USD/VND exchange rate has always remained high at this time is due to abundant liquidity in the banking system and reduced interest rates. However, the research team assessed that the exchange rate will increase but still be under control (2.6%) thanks to timely intervention measures of the State Bank of Vietnam (SBV).
In the world market, the USD exchange rate continued to increase due to reserve demand in the context of increasing political tensions in the Middle East, according to UOB.
At this time, when the FED continues to consider lowering interest rates and the demand for foreign currency for import and export continues to increase, the USD/VND exchange rate will not be able to cool down immediately.
According to Mr. Dinh Duc Quang, Managing Director of Currency Trading Division, UOB Vietnam Bank, the USD exchange rate will continue to fluctuate due to the uncertainty of the FED's interest rate hike plan. The exchange rate is likely to recover by the end of the year after the FED may have continued to cut interest rates.
On the free market, as of April 16, the USD price was at 25,470 - 25,600 VND for buying and selling, respectively, an increase of 20 VND for buying and 50 VND for selling compared to the previous session.
According to financial experts, the gold market is currently lacking in resources, and the domestic gold buying and selling prices are very different. This can easily lead to speculation and gold smuggling, pushing up the free USD price.
It is worth mentioning that when the free USD price increases, importers also tend to buy more USD and unintentionally push the USD price in banks higher.
In the recently released April 2024 monetary macro report, WiResearch assessed that the March exchange rate continued to record pressure when the exchange rate in the free market increased beyond the historical peak at the beginning of the month, then fluctuated around the historical peak.
In addition to the FED factor, the analysis team believes that the main cause is also the difference between domestic and world gold prices.
To reduce the pressure on the exchange rate, the State Bank of Vietnam has recently issued treasury bills to drain liquidity from the market. However, the effectiveness of this measure may not be as expected due to many other complex and unpredictable factors in both the international and domestic markets that are affecting the exchange rate.
Accordingly, last month, the State Bank organized a bidding session on the mortgage channel with a 7-day term and an interest rate of 4.0%.
However, there is no winning bid volume, no more circulating volume on the market.
At the same time, the State Bank of Vietnam carried out net withdrawal activities continuously for 15 sessions from March 11 to 29 with a total volume of VND 171.2 trillion and a term of 28 days.
The winning interest rate ranges from 1.32 to 2.5%. The objective of this activity is to absorb liquidity from the market 2 to reduce short-term speculative pressure on exchange rates.
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