Hot growth in banks, deep decline in the free market
In the first trading hours of the new year 2024, the foreign exchange market was calm as banks did not rush to adjust the USD/VND exchange rate. However, after 10am, a "small wave" began to appear, with more and more banks changing their listing charts mainly in an upward trend.
The USD/VND exchange rate at Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) is currently listed at: 24,165 VND/USD - 24,505 VND/USD, up 160 VND/USD, equivalent to 0.67% for buying; up 80 VND/USD, equivalent to 0.33% for selling.
Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) is listing the exchange rate at: 24,120 VND/USD - 24,460 VND/USD, an increase of 40 VND/USD in both buying and selling directions compared to the end of 2023.
Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) adjusted the USD price up by 75 VND/USD in both buying and selling directions to 24,185 VND/USD - 24,485 VND/USD.
In the first trading session of the new year 2024, the USD/VND exchange rate increased sharply in banks but decreased sharply in the free market. Illustrative photo
The USD/VND exchange rate at Techcombank is: 24,176 VND/USD - 24,486 VND/USD, up 66 VND/USD for buying, up 56 VND/USD for selling.
It can be seen that the USD is increasing quite strongly in the banking system but decreasing significantly in the free market.
At Hang Bac and Ha Trung, Hanoi's "foreign currency streets", the USD is commonly traded at 24,650 VND/USD - 24,700 VND/USD, down about 50 VND/USD compared to the end of 2023. At each different store, the difference can reach 10 VND/USD.
Calm in world markets
The dollar steadied on the first trading day of the new year as traders weighed the prospect of aggressive interest rate cuts from the US Federal Reserve in 2024 and looked to economic data this week for clues on the central bank's next moves.
The dollar index, which measures the US currency against six “rivals” in a basket of currencies, fell 2% in 2023, marking a two-year gain and was last at 101.43, up 0.049% on Tuesday.
According to the CME FedWatch tool, markets are currently pricing in an 86% chance of a rate cut starting in March, with more than 150 basis points of easing expected this year.
“The question is when and how quickly the rate cuts will be implemented,” Marc Chandler, chief market strategist at Bannockburn Global Forex, said in a note.
“The easing of price pressures and weaker growth momentum has caused market sentiment to swing significantly from the ‘higher for longer’ mantra of most of last year to aggressively easing valuations,” Chandler said.
Focus now shifts to a slew of economic data this week, including employment and nonfarm payrolls. Minutes from the Fed’s last meeting in December are due out on Thursday and will provide insight into central bankers’ thinking about rate cuts this year.
At its December policy meeting, the Fed adopted an unexpectedly dovish tone and forecast a 75 basis point rate cut by 2024.
That contrasts with other major central banks, including the European Central Bank, or ECB, and the Bank of England, or BoE, which have both reiterated that they will keep interest rates higher for longer.
However, traders are pricing in a 158 basis point cut from the ECB this year, while the BoE also expects a 144 basis point rate cut in 2024.
The euro fell 0.07% to $1.1036, edging away from a five-month high of $1.11395 it hit last week. The common currency rose 3% last year, its first annual gain since 2020.
The pound traded at $1.2726, up 0.02% on the day, having posted its strongest annual performance last year since 2017, when it gained 5%.
Meanwhile, the Japanese yen weakened 0.24% to 141.20 per dollar to start the new year on a sluggish note, after falling 7% against the dollar in 2023.
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