Exchange rate to cool down, deposit interest rates to inch up by year-end: broker
While the VND/USD exchange rate may cool off toward the VND25,000 mark, interest rates on savings could see modest increases over the rest of the year, broker MB Securities (MBS) said in its latest macroeconomic report.

The VND/USD exchange rate is forecast to cool down by the end of 2024. Photo courtesy of the government's news portal.
Cooling VND/USD exchange rate
November saw a dramatic rise in the U.S. dollar, with the DXY index continuing its upward trend, peaking at a two-year high of 107.6 points in mid-November.
According to MBS, the USD’s strength was largely supported by the "Red Sweep" which occurred when Donald Trump won the Presidency election for the second time and the Republican Party regained control of both chambers of the congress.
This political shift is expected to pave the way for Trump to implement his tax cuts and impose tariffs on imports, measures that could fuel inflation and likely result in the Federal Reserve (Fed) maintaining high interest rates.
Additionally, a stable U.S. economy - with an unemployment rate steady at 4.1%, a robust PMI (Manufacturing Purchasing Managers' Index) for services, increased consumer spending, and cooling inflation - has further bolstered the dollar.
The Fed recently hinted at reducing interest rates at a slower pace due to the economy showing no signs of significant concern. However, the likelihood of a rate cut in December remains uncertain, with concerns that Trump’s policies might reignite inflation and force the Fed to keep tightening its stance.
The sharp rise in the USD has created significant pressure on the VND/USD exchange rate, pushing interbank rates to a high of VND25,346 per USD by the end of November.
The VND has depreciated by around 4.1% against the USD since the beginning of the year, nearing the peak of 4.6% seen in May.
MBS expects the pressure on the exchange rate to ease in the coming months, thanks to intervention measures from the State Bank of Vietnam (SBV). However, the process will likely be gradual as the policies introduced by the new U.S. president are anticipated to continue supporting the USD, putting sustained pressure on the exchange rate.
Based on these factors, MBS forecasts that the exchange rate pressure will moderate, with the USD potentially falling to around VND25,000 by the end of 2024. Positive factors in the first 11 months of 2024 such as a trade surplus of approximately $24.3 billion, a 7% increase in disbursed FDI, and a strong recovery in tourism (up 41% year-on-year) are expected to contribute to this trend.
“The macroeconomic environment will likely remain stable and improve, further supporting exchange rate stability in 2024. Furthermore, as the Fed has started cutting rates (75 basis points since September), there is room for continued easing, though at a slower pace,” it says.
12-month deposit rate to rise 0.2 percentage points in 2024
After about two months of stagnation, deposit interest rates began rising again in November, with 16 banks, including major players like Agribank, Techcombank, and MBBank, increasing their rates by 0.1-0.7 percentage points per year.
MBS forecasts that this upward trend will continue by the end of the year, driven by the rapid growth of credit - almost doubling the pace of deposit growth. As of November 22, credit growth had reached 11.12%, higher than the 9.15% recorded in the same period last year.
Non-performing loans (NPLs) in the banking system rose 4.55% from the end of 2023, nearly matching the year-end level of 2023 and more than double the 2% level seen in 2022. This rising NPL rate is a key factor pushing banks to continue adjusting deposit interest rates to attract new capital, ensuring liquidity.
By the end of November, the average 12-month deposit rate among commercial banks stood at 5%, up 0.14 percentage points from the start of the year. Meanwhile, state-owned banks maintained their rates at 4.7%, a decrease of 0.26 percentage points from the year beginning.
MBS believes that the recovery in credit growth, coupled with a stronger pace of production and investment in the final months of the year, could put pressure on the liquidity of the banking system, potentially leading to higher deposit rates. On the other hand, low inflation and Fed rate cuts could provide some space for monetary policy easing in Vietnam.
“Based on these factors, we forecast that 12-month deposit rates at major commercial banks could inch up 20 basis points (0.2 percentage points) to reach around 5.1-5.2% by the end of 2024,” the broker predicts.
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