SBV’s USD/VND central exchange rate hits all time high

The move came as the dollar index (DXY) hovered around a four-month high of more than 105, with the market welcoming Donald Trump's victory in the US presidential election.

Meanwhile, the SBV on the day remained unchanged the dollar rates that it buys and sells for commercial banks at its Central Banking Department at VND23,400 and VND25,450 per dollar.

With a margin of five per cent, commercial banks on Thursday were allowed to list the USD/VND exchange rate in the range of VND23,069 and VND25,497 per dollar.

Under the same move, the USD/VND exchange rate listed at commercial banks also almost hit the regulated cap on Thursday. Accordingly, all major banks quoted the dollar selling price at VND25,497 per dollar, the highest level in history.

Since the beginning of this year, the USD/VND exchange rate at commercial banks has increased by about VND1,100 per dollar, equivalent to an increase of 4.4%. In October and early November 2024 alone, the đồng depreciated by more than 3% against the dollar.

Analysts said the dong is likely to continually face strong depreciation pressure due to the election and when he implements his tough international trade policies.

Under a report released early this week, analysts of the ACB Securities Company (ACBS) said the policies, including a corporate income tax cut and an import tariff imposition, will strengthen the value of the US dollar and a stronger dollar will increase the risk of depreciation for the dong in the short term.

In addition, tax cuts in the US can support the economy, but high import costs can cause inflation and slow the Fed's interest rate cuts. Long-term high dollar-denominated interest rates will increase pressure on the USD/VND exchange rate.

ACBS’s analysts explain if dong interest rates increase, it will affect the recovery ability of domestic enterprises. In addition, the profits of the banking sector may also be negatively affected. Finally, enterprises with high debt costs, especially dollar debt, will also be negatively affected.

This will cause Vietnam to have no room for easing monetary policy, which will negatively impact the economy in general and the profitability of the banking sector, ACBS’s analysts noted.

Sharing the same view, experts at the Shinhan Securities Company (SSV) said the exchange rate may face upward pressure until the end of this year because the market tends to choose to invest in low-risk assets and wait for the impact of the US new government's policies, instead of reacting immediately to any US Federal Reserve (Fed)'s interest rate cuts.

SSV’s analysts forecasts that the dollar and US government bonds will be safe havens, which push the dollar value to continue to increase compared to other currencies until the end of this year.

Director of HSBC Vietnam’s Foreign Exchange, Capital Markets and Securities Services Division, Ngo Dang Khoa, also believes that, when Trump takes office as US President, the DXY is likely to continue to increase, because the Fed will slow the roadmap of cutting interest rates.