Dollar index reaches 2-year high, Vietnam’s exchange rate hits new peak

The exchange rate in Vietnam made a new peak on Thursday as the State Bank of Vietnam, the country’s central bank, increased its central exchange rate by VND26, or 0.11%, to VND24,304 per USD.

The previous peak was VND24,298 per USD recorded on November 15-16.

The development came in the context the U.S. Federal Reserve cut the interest rates by 0.25 percentage points on Wednesday (local time), driving the U.S. Dollar Index (DXY) to a two-year peak of 108.24 on Thursday.

With a trading band of 5%, commercial banks in Vietnam can set their exchange rates at VND23,089-25,519.

As of Thursday noon, Vietcombank, a major state-controlled bank in Vietnam, set the buying and selling rates at VND25,189 and VND25,519 per USD, up from VND25,161 and VND25,491 a day ago, respectively.

VietinBank, another major state-controlled bank, increased the rate to VND25,244 and VND25,519 on Thursday, versus VND25,180 and VND25,491 on Wednesday.

Techcombank, a leading private bank, offered the buying and selling rates at VND25,298 and VND25,519, higher than Wednesday rates of VND25,293 and VND25,491.

State-controlled BIDV, a “Big 4” lender in Vietnam, set the rates at VND25,219 and VND25,519, up from VND25,191 and VND25,491 a day ago, respectively.

Fed cut the interest rates to 4.25-4.5% as expected by the market. This is the third time in a row that it cut the interest rates, following two recent occasions of 0.5 and 0.25 percentage points.

Fed also hinted that it would slow down the pace of easing monetary policy as the employment and inflation is the United States are stable.