According to Associate Professor Dr. Ngo Tri Long - economic expert, in 2025, Vietnam - a country with export strengths will face many opportunities and challenges from exchange rate fluctuations.
Exchange rates continue to fluctuate
The year 2025 marks an important period for the global economy, as many countries have gradually recovered from the COVID-19 pandemic and ensured sustainable development. In this context, Vietnam - a country with export strengths - faces many opportunities and challenges on the path to maintaining economic growth. Currency exchange rate, one of the factors with great impact, is a top concern.
According to Associate Professor, Dr. Ngo Tri Long - an economic expert, 2025 is forecasted to be a year of strong fluctuations in exchange rates due to the influence of many factors: US monetary policy and fluctuations in the USD are forecast to continue to strongly affect the global financial market, especially emerging economies like Vietnam. In 2025, the US Federal Reserve (FED) is expected to slow down the pace of interest rate cuts due to concerns about persistently high inflation and other potential policy changes.
It is forecasted that in 2025, the greenback will continue to maintain its strong position, putting pressure on currencies in emerging markets. "It is forecasted that in 2025, the USD/VND exchange rate will continue to fluctuate in an upward direction," the expert predicted.
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| It is forecasted that in 2025, the USD/VND exchange rate will continue to fluctuate in an upward direction. Photo: Duy Minh |
The expert also cited evidence from international banks such as: UOB Bank also forecasts that the exchange rate will reach 25,800 VND/USD in the first quarter, increase to 26,000 VND/USD in the second quarter, peak at 26,200 VND/USD in the third quarter and decrease slightly to 26,000 VND/USD in the fourth quarter of 2025.
In addition, the global economy is forecast to maintain a stable growth momentum. The International Monetary Fund (IMF) forecasts the global economy to grow by 3.1% in 2025 thanks to monetary easing policies from major central banks such as the FED and the European Central Bank (ECB).
“This recovery is driven by monetary easing policies from major central banks that could affect the VND/USD exchange rate, thereby affecting Vietnam's export activities. The FED's interest rate cut could weaken the USD in the short term. However, the US government's trade policies, especially if they tend to be protectionist, could increase the value of the USD, putting pressure on the VND/USD exchange rate,” said Associate Professor Dr. Ngo Tri Long.
With such predicted developments, the economic expert said that the State Bank of Vietnam's policy needs to continue to flexibly manage interest rates, control credit growth and stabilize exchange rates to support exports.
Opportunities and challenges for import and export
According to the expert, Vietnam's import and export will have a competitive advantage when the VND slightly depreciates against the USD, Vietnamese goods become more competitive because cheaper goods make Vietnamese products more attractive in international markets. "Vietnamese enterprises can compete better on price compared to countries with less volatile exchange rates or stronger currencies. This positively affects Vietnam's key export industries such as textiles, footwear, and electronics," Mr. Long affirmed.
In addition, the depreciation of the exchange rate brings a great advantage when exporting to markets such as the US and EU. Because the prices of Vietnamese goods in USD are lower, foreign consumers and businesses tend to import more. "This is especially true in the context of major competitors such as China, Thailand or India having unfavorable exchange rates," he said.
Above all, a stable exchange rate creates confidence for investors and attracts long-term capital flows. Because investors often prioritize countries with stable exchange rate policies because they not only consider production costs but also take into account potential fluctuations in profits due to devaluation of the domestic currency. "The policy of maintaining a stable VND/USD exchange rate for many years has helped Vietnam become a leading destination for manufacturing investors in the textile, electronics, and food processing industries" - Associate Professor, Dr. Ngo Tri Long emphasized; at the same time, he affirmed that a stable exchange rate plays an important role in attracting foreign investment in export industries, thereby expanding export opportunities through improving production capacity and product quality. To achieve this, macroeconomic policies need to be synchronous, ensuring a stable and transparent investment environment.
According to the expert, exchange rates affect the exploitation of Free Trade Agreements (FTAs). Currently, Vietnam has signed many FTAs such as: CPTPP, EVFTA, RCEP... These agreements help reduce or eliminate tariffs, bringing competitive advantages to exported goods. "When the exchange rate is stable, businesses can be flexible in assessing costs, creating trust for foreign partners; stable exchange rates demonstrate economic stability, helping to build prestige and trust with import partners. Tariff incentives from FTAs maximize their value when combined with exchange rate stability, increasing the competitiveness of Vietnamese goods compared to other countries" - he said.
In particular, a stable or slightly decreasing exchange rate is an important supporting factor for Vietnamese enterprises to optimally exploit FTAs, thereby improving competitiveness and expanding export opportunities in the international market.
According to Associate Professor Dr. Ngo Tri Long, although a stable or slightly decreasing exchange rate brings many benefits, there are still challenges such as the risk of losing price advantage. If competing countries, for example, Thailand and Indonesia, actively devalue their currencies, Vietnamese goods may lose their advantage. Import costs increase for some input materials imported in foreign currencies, when the exchange rate is not suitable or fluctuates in the opposite direction, it can increase production costs.
At the same time, Vietnam's import and export also faces many challenges from exchange rate fluctuations such as: Increased cost of importing raw materials. The increase in exchange rate has a strong impact on the economy and export enterprises, especially in Vietnam, where most input materials depend on imports. Increased cost of input materials when USD increases, the value of VND decreases, causing the cost of importing raw materials from countries using USD or pegging value to USD such as China, Korea, Japan to increase. Enterprises with low profit margins will be under great pressure on competitiveness, higher production costs than export enterprises need to maintain competitive prices to attract international customers. "Export enterprises often have to sign long-term contracts with fixed prices, making it difficult to adjust prices to offset increased raw material costs. And when increasing prices to preserve profits, enterprises will face the risk of losing customers to other competitors" - the expert analyzed.
In addition, Vietnam's import and export also face the risk of cost-push inflation. Because when import costs increase, businesses are forced to increase selling prices, contributing to cost-push inflation. This not only reduces purchasing power but also negatively impacts the entire supply chain and domestic market. The increase in exchange rate poses a major challenge for export enterprises in Vietnam, especially in terms of raw material import costs. However, Vietnamese enterprises cannot rely solely on the exchange rate advantage but need to rely on other factors such as productivity, product quality and costs. To maintain and increase competitive advantage, production efficiency is the key factor; at the same time, it is necessary to apply appropriate strategies and take advantage of opportunities from FTAs that can help minimize risks and increase long-term competitiveness.
“The strategy to deal with challenges to improve labor productivity requires strengthening human resource training, digital transformation and investment in high technology. Reducing import dependence, promoting domestic production to cope with fluctuations in imported materials. To maximize the advantages of FTAs, businesses need to take advantage of all favorable tariff conditions to increase competitiveness,” the expert recommended.
| Assoc. Prof. Dr. Ngo Tri Long - economic expert: The year 2025 marks an important turning point for Vietnam in exploiting its export potential in the context of strong exchange rate fluctuations. Despite facing many challenges such as increasing import costs, inflation risks and regional competition, Vietnam is also facing great opportunities thanks to its competitive price advantage, stable FDI capital flows and FTAs. To maximize opportunities and minimize risks, combining flexible strategies such as improving labor productivity, reducing dependence on imported raw materials and fully exploiting the benefits from FTAs will be the key to success. In the long term, the ability of export enterprises to adapt and innovate will determine Vietnam's role on the global economic map. |
Source: https://congthuong.vn/thach-thuc-tu-bien-dong-ty-gia-voi-xuat-nhap-khau-372209.html
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