USD/VND exchange rate accelerates
The decision by the US Federal Reserve (FED) to stop raising interest rates did not have a strong impact on the domestic foreign exchange market as the USD/VND exchange rate was “disordered”. However, after China cut its lending interest rate, the USD strengthened globally, even against the VND.
In the domestic market, the US dollar increased both in the banking system and the free market.
At the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), the USD/VND exchange rate is listed at: 23,360 VND/USD - 23,700 VND/USD, an increase of 10 VND/USD in both buying and selling directions.
The increase of 10 VND/USD in both directions was also applied by Vietnam Export Import Commercial Joint Stock Bank (Eximbank). By noon on June 20, the USD/VND exchange rate at Eximbank was 23,380 VND/USD - 23,680 VND/USD.
The decision to cut two lending rates caused the USD to increase sharply against the yuan. The USD/VND exchange rate also accelerated. Illustrative photo
Vietnam Prosperity Joint Stock Commercial Bank (VPBank) exchanged USD at the price: 23,388 VND/USD - 23,698 VND/USD, up 8 VND/USD for buying, up 12 VND/USD for selling.
The exchange rates of Tien Phong Commercial Joint Stock Bank (TPBank) and Vietnam Technological and Commercial Joint Stock Bank (Techcombank) had lower increases with increases of 3 VND/USD and 5 VND/USD. The exchange rates at these two banks were listed at: 23,359 VND/USD - 23,699 VND/USD and 23,368 VND/USD - 23,702 VND/USD, respectively.
At Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank), the exchange rate is: 23,354 VND/USD - 23,694 VND/USD, up 39 VND/USD for buying but down 41 VND/USD for buying.
In the free market, the USD also tends to increase. At Hang Bac and Ha Trung, the “gold streets” in Hanoi, the listed exchange rate is: 23,500 VND/USD – 23,550 VND/USD, an increase of 30 VND/USD for buying but unchanged for selling.
China cuts lending rates, USD "heats up"
The US dollar rose sharply on Tuesday and hit a seven-month high against the yen, while the yuan slid after China cut two benchmark lending rates for the first time in 10 months.
China on Tuesday cut its benchmark interest rates for one-year and five-year loans by 10 basis points, as expected, as authorities seek to boost a sluggish recovery in the world's second-largest economy.
The offshore yuan eased slightly after the decision and was down more than 0.1% to 7.1734 per dollar, weakening near last week's roughly seven-month low.
Elsewhere, the US dollar edged up in cautious trade after a US holiday on Monday kept market activity subdued.
The greenback hit a peak of 142.26 yen in early Asian trading, its highest since November, following the Bank of Japan's (BOJ) decision on Friday to maintain its ultra-easy monetary policy.
The yen has come under renewed pressure amid widening interest rate differentials between Japan and other developed markets globally.
“We believe that the Japanese economy is recovering solidly compared to other major economies and will continue to outperform going forward. However, if monetary policy does not reflect this change in economic fundamentals and the BOJ maintains its dovish stance, the yen will depreciate further,” Min Joo Kang, senior economist for Korea and Japan at ING, said in a client note.
The Australian dollar fell 0.42% to $0.6818, after minutes from the Reserve Bank of Australia's policy meeting this month showed the board considered keeping interest rates on hold as consumer spending was clearly slowing, but felt the risks to inflation had shifted to the upside.
The New Zealand dollar fell 0.12% to $0.6191, after falling more than 0.5% in the previous session.
In other currencies, the euro fell 0.03% to $1.0917, although it remained supported by a still-hawkish European Central Bank (ECB) after two policymakers on Monday said the bank should err on the side of raising interest rates further as inflation could be even higher than expected.
The pound rose 0.05% to $1.2797, ahead of UK inflation data and the Bank of England's interest rate decision later in the week.
Markets are expecting the BoE to raise interest rates by a quarter of a point on Thursday, which would be the 13th consecutive increase as the bank faces an unexpected inflation surprise.
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