After the US election, how is Vietnam's economy affected?

Kinhtedothi - The US presidential election results have had a strong impact on the international financial market. The world gold price has lost nearly 100 USD/ounce since the news of Mr. Donald Trump's election as the 47th President of the United States, while the health of the USD has strongly recovered.

Financial markets are volatile.

The international gold market has been sold off heavily. On November 7, the gold price fell to 2,657 USD/ounce, while spot gold is still hovering around the lowest price in 3 weeks at 2,661 USD/ounce.

"Precious metals are facing a key test of support as the US Federal Reserve's interest rate decision adds to downside risks," said James Hyerczyk, analyst at FX Empire.

Gold and stock prices often fluctuate sharply after US presidential elections. Photo: iStock.

Investors are now looking to a renewed focus on tariffs and fiscal stimulus from the Trump administration, both of which could push the dollar higher. “With the dollar strengthening and yields rising, gold faces immediate downside risks. The precious metal could fall to its 50-day moving average of $2,636.66 an ounce if the Fed signals more caution about future rate cuts,” Hyerczyk wrote.

Financial expert Tran Duy Phuong said that gold prices always decline after election results and this time is no exception. Mr. Trump's policy favors low interest rates, so it will put pressure on the FED to cut interest rates quickly.

Domestically, the price of SJC gold decreased by 2 million VND/tael for buying and 1.5 million VND/tael for selling, down to 85.0-87.5 million VND/tael. The price of gold rings on the market also decreased by about 2 million VND/tael and fell far below the 87 million VND/tael mark. Currently, SJC Company lists this type of gold at 84.7-86.6 million VND/tael.

The dollar index on the world market has jumped to its highest level since July, while US Treasury bond yields have also increased sharply. The yield on the 10-year Treasury bond is currently at 4.4%. Mr. Trump's victory has led many experts to predict that it could boost inflation, making the Federal Reserve (Fed) more "hawkish".

The State Bank of Vietnam (SBV) this morning, November 7, listed the central exchange rate at 24,258 VND/USD, up 10 VND compared to the previous one. With a 5% margin compared to the central exchange rate, banks are allowed to buy and sell USD in the price range of 23,045-25,470 VND/USD.

Major banks buy and sell USD at 25,140-25,470 VND/USD (buy - sell). Joint stock banks allow USD transactions at 25,110-25,470 VND (buy - sell). The USD selling price at banks increased according to the adjustment of the monetary management agency and remained at the ceiling price.

On the free market, the greenback is traded at 25,600-25,700 VND/USD (buy - sell), down 180 VND in both directions.

The US having a new president has a significant impact on gold prices, oil prices and monetary policies of countries.

In general, Mr. Trump's policy is trade protectionism, tax cuts, especially for the super rich, large corporations... Money will be pumped out through businesses.

The US economy is expected to be stronger under Trump. But oil prices may fall as Trump plans to boost oil and gas production. Trump also wants to keep interest rates low and has many economic support measures, so the US dollar may not be too strong, gold will stabilize and increase in price.

Experts also believe that if Mr. Trump is elected, he will have a strong policy of reducing taxes, increasing income for people, which means stimulating more spending. This will create pressure on inflation, and force the US Federal Reserve (Fed) to consider a policy of cutting interest rates.

Analysts at Agriseco Securities Company said that Donald Trump's policies are expected to increase US inflation in the short term, affecting the strength of the US dollar and many other economic items, including the roadmap for loosening monetary policy.

The strength of the US dollar will impact the USD/VND exchange rate in a strong upward trend. The State Bank of Vietnam will have a harder time managing monetary policy to stabilize inflation, support exports and economic growth.

Because for Vietnam, a country with an export-dependent economy, a stable exchange rate is an important factor. If the dong strengthens too much, Vietnam's export goods will become more expensive in the international market, thereby affecting the competitiveness of export enterprises.

Policy response recommendations

The US election also has a strong impact on the economies of other countries, including Vietnam. The latest macro report by ACBS Research on the impact of the 2024 US presidential election on the Vietnamese economy indicates that: for Vietnam, an open economy with trade revenue accounting for 158% of GDP, the United States is the largest export partner (trade surplus of 83 billion USD) and China is the largest import partner (trade deficit of 49 billion USD), the US election results will also have a significant impact.

If Mr. Trump imposes import tariffs on goods from Vietnam, export industries such as seafood, textiles, tires, wooden furniture, and steel will face great tax pressure in the short term and long-term difficulties when demand in the US market decreases. However, this difficulty can be partly offset if Vietnamese enterprises can capture market share of exports from China.

In the long term, reducing dependence on Chinese goods is a strategic goal in recent US policy. Therefore, the trend of FDI from China to neighboring countries, including Vietnam, is expected to continue in the coming years, creating momentum for FDI growth. Industrial real estate, transportation and warehousing businesses will benefit from this increased output of goods.

According to Ms. Bui Thi Quynh Nga - analyst at Phu Hung Securities (PHS), when Mr. Trump is re-elected, the Vietnamese Government needs to have policies and select investment capital sources effectively.

"Choose foreign investors with financial and technological potential, who have a spreading role, promote the development of domestic enterprises, and contribute to the domestic economy. At the same time, it is necessary to strengthen the mechanism of inspection and supervision of input and output of FDI enterprises to ensure sustainable benefits" - Ms. Nga emphasized.

For businesses, the US president’s policies can affect supply chain management and business operating models. The necessary scenario for Vietnamese businesses is to equip themselves with response strategies such as: diversifying supply sources, enhancing digital technology, and flexibly adjusting structures to minimize risks and ensure the stability of the supply chain.

Regarding exchange rates, Shinhan Securities experts believe that exchange rates from now until the end of the year will face certain challenges as market sentiment chooses low-risk investment options and waits for direct impacts from Mr. Trump's policies, instead of acting on expectations from the Fed's interest rate cuts.

Regarding the current gold market policy, Dr. Nguyen Nhat Minh - RMIT University Vietnam commented that the State Bank has adjusted domestic gold prices in line with international gold prices, in order to limit the price difference between the two markets. However, there are still some difficulties in managing and controlling the gold market, especially the issue of smuggling and commercial fraud related to gold.

Ultimately, current policy needs to strike a balance between ensuring gold market stability and enabling people and businesses to access gold legally. Building a transparent and sustainable gold market will help strengthen investor and consumer confidence while minimizing risks associated with gold price fluctuations.

Source: https://kinhtedothi.vn/sau-bau-cu-my-kinh-te-viet-nam-bi-anh-huong-the-nao.html