In just the first 3 weeks of 2024, banks increased the USD price by 350 VND, equivalent to 1.5%, to around 24,765 VND/USD for selling, and 24,395 - 24,425 VND for buying. Meanwhile, the increase in the US dollar in the whole year of 2023 was around 3%. In the free market, the US dollar price increased by about 1.7%, to 25,100 VND for selling, and around 25,070 VND for buying. The increase in the dollar price is quite strange because the USD source in the market is quite abundant. Remittances from Ho Chi Minh City alone in the last weeks of 2023 increased by 580 million USD compared to the expected figure, up to 9.5 billion USD for the whole year.
USD price increased by 1.5% in the first 3 weeks of January
Mr. Dinh Duc Quang, Managing Director of Currency Trading Division, UOB Vietnam Bank, assessed that the fluctuation was about 1.5% compared to the US dollar and was completely consistent with the appreciation of the US dollar compared to major currencies in the world and currencies in emerging markets when the US economy continued to grow outstandingly. Currencies of emerging markets such as Thai Baht, Malaysian Ringgit, Indonesian Rupia... depreciated by 2-3% in recent weeks.
In the free market, the USD/VND exchange rate fluctuates more than in the commercial banking system. However, according to Mr. Dinh Duc Quang, the trading volume in this market is very small compared to the overall activities of the domestic foreign exchange market. Therefore, larger fluctuations, if any, from the free market are not a major factor that can put pressure on the stability of the market.
The difference in interest rates between VND and USD continues to be a factor affecting foreign currencies. Banks trade USD interest rates from 5 - 6%/year, while VND interest rates are from 0.12 - 4.4%/year. USD interest rates on the interbank market are 1.8 - 5%/year higher than VND interest rates for all terms. Mr. Dinh Duc Quang said that the record low level of VND interest rates on both deposit interest rates and interbank interest rates may continue in the coming time when capital demand in the economy has not recovered to a high level. This will be a factor affecting capital and foreign exchange business plans at commercial banks in the short term. Along with that, customers' foreign currency needs can create temporary fluctuations in supply and demand in the market.
Forecasting the exchange rate this year, UOB's recent report continues to have positive assessments of Vietnam's macro factors and major balances, including the stability of the USD/VND exchange rate. UOB generally forecasts a slight appreciation of the Vietnamese Dong in 2024 in the prospect of positive improvements in domestic macro factors and the possibility of US dollar interest rates starting to be cut from mid-2024. The USD/VND exchange rate will be stable in the range of 23,500 - 24,500 VND/USD in 2024.
Similarly, HSBC forecasts that the USD/VND exchange rate will be at 24,400 VND/USD by the end of 2024, and Vietnam's economy will grow by 6% in 2024.
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