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Usd vnd
After being anchored quite stably in the first two quarters of 2023,
the USD/VND exchange rate started to fluctuate strongly from August.

The main cause of this volatility is attributed to the divergent policy developments of the FED and PBOC,
the contrast in monetary policy management between Vietnam and the US.

From the domestic economic perspective,
the contrast in monetary policy management between Vietnam and the US is considered the fundamental cause of the general pressure on the exchange rate.

Domestic growth slowed down,
inflation cooled quickly and the stability of the foreign exchange market in the first months of 2023 showed that Vietnam’s policy priority focused on supporting growth.

This is completely opposite to the US, in the context of the economic development situation still positive but the core inflation of this country is still quite far from the target of 2%,
FED still has to maintain a tight monetary policy.

Although the existing pressure on the exchange rate mentioned above is quite clear,
the trend of sudden fluctuations of the exchange rate in August may only be short-term.

In the medium - long term,
dong currency is expected to appreciate again.

In summary, despite having some “waves” of fluctuations,
the USD/VND exchange rate is still under control.

With the exchange rate almost standing still in the first half of the year, the trend of increasing exchange rate since early August has not actually caused much pressure on exchange rate control.

In addition, both Vietnam’s current trade balance and income balance are still maintaining a surplus,
so the Government still has full ability to control the exchange rate within the target range.

However, the risk occurs when the exchange rate increases too quickly to 24,500 or 25,000 will be a milestone for the government to intervene more strongly in the foreign exchange market.