Identify factors affecting exchange rates

Last weekend, the State Bank unexpectedly raised the USD selling price to a new record high, over 26,000 VND. Illustrative photo: VNA

The central exchange rate listed by the State Bank continued to increase on March 25, to 24,847 VND/USD, up 16 VND compared to the morning of March 24. With a margin of +/-5%, today's ceiling exchange rate is 26,089 VND/USD and the floor exchange rate is 23,605 VND/USD. The reference exchange rate at the State Bank's Transaction Office is 23,640 - 26,022 VND/USD (buy - sell).

At commercial banks this morning, March 25, Vietcombank and BIDV both listed the USD exchange rate at 25,460 - 25,820 VND/USD (buy - sell), an increase of 40 VND in both buying and selling compared to the same time yesterday. In the free market, the USD price is also anchored near the 26,000 VND range.

Notably, since the beginning of the year, the central exchange rate has been adjusted up significantly, by 512 VND, equivalent to an increase of 2.1%. Previously, in the last session of last week (March 21), the market recorded for the first time that the State Bank increased the USD selling price to over 26,000 VND.

In the international market, the DXY index (measuring the strength of the greenback) is currently above the 104 point threshold. As of March 24, DXY recorded a decrease of 3.7% compared to the end of 2024. The USD fell against most currencies as it was weighed down by the uncertain growth outlook of the US, due to concerns about the impact of tariffs on inflation and the economy.

In a recent market update report by Maybank Investment Bank, the State Bank of Vietnam raised the USD offering price to a new record high of VND26,003 over the weekend, marking a 2.1% increase since early February 2025, amid rising tensions in the domestic foreign exchange market.

In fact, last week, the domestic gold market set a record increase, when the gold price exceeded 100 million VND/tael in the context of the world gold price anchored at a historical peak of over 3,000 USD/ounce.

Compared to the end of 2024, the domestic gold price has increased by about 19%, more or less putting pressure on the exchange rate. Although the gold market is being closely monitored and managed by the Bank, when the gold price increases, it will affect the demand for domestic gold, gold traders will use foreign currency to buy gold. Not to mention, there are also groups of gold smugglers in the market, leading to a certain impact on the exchange rate.

According to Associate Professor, Dr. Nguyen Huu Huan, a financial expert, although the USD is currently weaker than at the end of last year, the pressure on the exchange rate still exists. The reason is that the price of gold has recently recorded a sharp increase, putting pressure on the foreign exchange market.

In addition, Mr. Huan said that the general pressure on exchange rates in 2025 is mainly due to the policy of reducing interest rates to support economic growth. In the meeting last week, the US Federal Reserve (Fed) continued to keep the basic interest rate unchanged. This development causes the interest rate gap between VND and USD in the international market to remain high, creating pressure on the exchange rate.

“Concerns related to Donald Trump’s tariff policy could cause a US economic recession and inflation, weakening the USD. However, the USD/VND exchange rate is not only related to the USD, but also in relation to cash flow in the market. When the interest rate gap increases, it will put pressure on foreign capital flows and the evidence is that foreign investors have continuously sold net in recent times. These things have put pressure on the exchange rate,” Associate Professor Dr. Nguyen Huu Huan commented.

According to recent statistics from VPBank Securities Joint Stock Company (VPBanks), foreign investors are still net sellers in the Vietnamese stock market. In particular, last week, the market recorded the strongest net withdrawal from foreign investors since the beginning of the year, reaching more than VND4,200 billion. Since the beginning of the year, foreign investors have net sold about VND22,000 billion.

On the other hand, the exchange rate is also under pressure from increased domestic demand for foreign currency as businesses increase imports of raw materials for production. According to data from the General Statistics Office, the trade balance of goods in February 2025 had a trade deficit of 1.55 billion USD, recording the first deficit since May 2024. In addition, the State Treasury has recently made USD purchase offers from commercial banks, which has partly tightened the supply of foreign currency and put more pressure on the exchange rate.

Although exchange rate pressure is still present and needs to be closely monitored, analysts expect the exchange rate increase in 2025 to be insignificant, fluctuating below 3%. According to Dr. Can Van Luc, a financial expert, since the end of 2024, the US has begun a roadmap to reduce interest rates as the economy worsens. In addition, US inflation has also decreased, creating room for the Fed to lower interest rates, although the roadmap may slow down. The USD has also recorded a significant depreciation since the beginning of this year. Therefore, the exchange rate is likely not a matter of concern this year.

Maybank Investment Bank experts also said that, in fact, on the market side, the USD offering rate has only increased by 0.5 - 0.8% since the beginning of the quarter, much lower than the fluctuations observed in the 2022 - 2024 quarters, when market pressure was higher.

In the near future, the securities company expects the foreign exchange market to remain stable without disrupting the State Bank's loose monetary policies. Meanwhile, interbank interest rates remain stable at around 4%, as the State Bank has recently reduced Treasury bill interest rates in the OMO market, a move that shows the State Bank wants commercial banks to be proactive in reducing interest rates.

“We believe that the foreign exchange market is still under the control of the State Bank. Therefore, the State Bank will continue to pursue an accommodative monetary policy to support domestic economic growth and development,” Maybank Investment Bank said.

According to VNA

Source: https://doanhnghiepvn.vn/kinh-te/nhan-dien-nhung-yeu-to-gay-tac-dong-len-ty-gia/20250326083325058