The US dollar is "sinking" again
Last night, the global financial market was waiting for a very important piece of information. That was the US Federal Reserve (FED) announcing its interest rate policy.
The US dollar fell against a basket of currencies on Wednesday after the Federal Reserve raised interest rates by a quarter of a percentage point, citing persistently high inflation as the rationale for the US central bank’s policy rate now at its highest in 16 years.
The hike brings the benchmark overnight rate into a range of 5.25% - to 5.50%, while the accompanying policy statement left open the possibility of another hike.
However, the dollar index, which measures the US currency against a basket of six major currencies, fell 0.345% to 1.1093. Futures expect the Fed's overnight interest rate to remain above 5% until June 2024.
On the night of July 26, the US dollar interest rate was raised by the FED once again to a 16-year high. However, the greenback was "submerged". Notably, the USD/VND exchange rate was "disordered". Illustrative photo
The Federal Open Market Committee (FOMC) meeting went as expected, with Chairman Jerome Powell “almost walking a fine line” between hawkishness and dovishness on the outlook for future interest rates, analysts said.
“The fact that he believes a soft landing is likely while leaving the door open to more rate hikes or no rates has sent the dollar lower and stocks higher,” said John Velis, head of macro strategy at BNY Mellon Markets. “The fact that he hasn’t been openly hawkish is probably behind the market moves immediately after the meeting and the press conference.”
The US economy's resilience in the face of what was seen as restrictive interest rates helped lift the US dollar index from a 15-month low of 99.549 hit on July 18.
But Amo Sahota, director at Klarity FX in San Francisco, said the Fed wants to avoid markets thinking about cutting rates too soon.
“The Fed wants to make sure the market is wary of pricing in a rate cut too soon, even though most market participants, including us, think we are there,” Sahota said.
The European Central Bank (ECB) is expected to deliver a similar hike on Thursday, but emerging evidence of an economic slowdown has raised questions about the chances of another rate hike later this year.
The euro rose 0.36% to $1.1093.
Klarity's Sahota said that while there is a chance the ECB will over-tighten and paralyze markets, “the expectation is that there will be two more rate hikes.”
The Bank of Japan meets on Friday, which could shed light on its yield curve control policy. Speculation about a hawkish adjustment to that policy sent the yen soaring earlier this month, but it has eased in recent days.
The yen rose 0.46% against the greenback to 140.21 per dollar.
USD/VND exchange rate trend is chaotic again
While the US dollar is being "submerged" in the world market, domestically, the USD/VND exchange rate has increased slightly in the banking system and decreased significantly in the "black market".
Specifically, from the beginning of the hour, at Hang Bac and Ha Trung - famous "foreign currency streets" of Hanoi, jewelry stores simultaneously adjusted the USD/VND exchange rate down to only 23,630 VND/USD - 23,680 VND/USD, down 20 VND/USD for buying, down 40 VND/USD for selling. Yesterday, the exchange rate dropped by 100 VND/USD.
In the banking market, the main trend of the USD/VND exchange rate is upward.
Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) listed the exchange rate at: 23,500 VND/USD - 23,840 VND/USD, an increase of 5 VND/USD in both buying and selling compared to the end of yesterday.
At the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), the exchange rate had the opposite trend when it was adjusted down by 10 VND/USD to 23,520 VND/USD - 23,820 VND/USD.
Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) traded USD at: 23,501 VND/USD - 23,841 VND/USD, up 36 VND/USD for buying but down 44 VND/USD for selling.
Vietnam Export Import Commercial Joint Stock Bank (Eximbank) has not changed its listed exchange rate. The exchange rate is currently trading at: 23,520 VND/USD - 23,830 VND/USD, unchanged from the end of yesterday.
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