Domestic trend disorder
The foreign exchange market on August 28th fluctuated strongly but without any clear trend. One bank strongly increased the USD price but some other places adjusted it down deeply.
Specifically, the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) listed the USD/VND exchange rate at: 23,850 - 24,190, an increase of 40 VND/USD in both buying and selling compared to the end of last week.
At Orient Commercial Joint Stock Bank (OCB), the USD/VND exchange rate is trading at: 23,843 - 24,308, down 16 VND/USD. At the beginning of the session, the USD even dropped by 60 VND/USD. Vietnam Technological and Commercial Joint Stock Bank (Techcombank) listed the USD at 23,850 VND/USD - 24,190 VND/USD, down 15 VND/USD in both directions.
While the world market is falling sharply, the USD is in turmoil in the domestic market. Illustrative photo
Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) exchanged USD at 23,845 VND/USD - 24,185 VND/USD, up 20 VND/USD for buying, down 60 VND/USD for selling compared to the end of last week. In the morning, the greenback also decreased 90 VND/USD for selling.
In the free market, the USD/VND exchange rate decreased slightly but still maintained the mark of 24,000 VND/USD. In Hang Bac and Ha Trung - the "foreign currency streets" of Hanoi, the exchange rate is commonly traded at: 24,070 VND/USD - 24,130 VND/USD, slightly lower than the USD price in the banking market.
It can be seen that the USD/VND exchange rate is in a chaotic trend even though the greenback has fallen sharply on the world market.
Sharp decline in world markets
The dollar fell from a 12-week peak as traders weighed the path of U.S. monetary policy after Federal Reserve Chairman Jerome Powell left the door open to further interest rate hikes, while the yen hovered near its lowest in more than nine months.
In a highly anticipated speech at the annual Jackson Hole Economic Policy Symposium, Chairman Powell promised to tread carefully at upcoming meetings as he noted both the progress made in easing price pressures as well as the risks from the U.S. economy’s remarkable strength.
“We will proceed carefully as we decide whether to tighten further or instead keep policy rates unchanged and wait for further data,” Powell said in a keynote speech.
“The Fed's job is to bring inflation down to our 2% target and we will do that,” Mr. Powell affirmed.
The dollar index, which measures the U.S. currency against six rivals, fell 0.115% to 104.05, but was not far from a 12-week high of 104.44 it hit on Friday. The index has risen more than 2% in August and is poised to snap a two-month losing streak.
The yen weakened 0.03% to 146.45 per dollar, not far from a more than nine-month low of 146.64 it touched on Friday as traders continued to watch out for any signs of intervention in the currency market from Japanese authorities.
The Bank of Japan will maintain its current ultra-easy policy as core inflation in Japan remains “slightly below” its target, the central bank governor said on Saturday.
Meanwhile, the euro and sterling bounced off two-month lows on Friday. The common currency rose 0.04% to $1.0804, while sterling was last at $1.2599, up 0.17% on the day.
The Australian dollar rose 0.55% to $0.644, while the New Zealand dollar gained 0.32% against the greenback to $0.592.
The CME FedWatch tool shows markets are pricing in an 80% chance the Fed will stand pat next month, but the probability of a 25 basis point hike in November is now at 48% compared with 33% a week ago.
“It’s unlikely we’ll get a rate hike from the Fed in September. But November is becoming a ‘live’ event where data points are likely to drive rate expectations,” said Chris Weston, head of research at Pepperstone.
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