Exchange rate trending up amid Middle East tensions: Vietnam central bank

The USD/VND exchange rate has shown a slight upward trend this week and risen compared with the end of last year due to the Middle East tensions, said State Bank of Vietnam Deputy Governor Pham Thanh Ha.

Escalating tensions and military conflicts in the Middle East have driven oil prices up by 8-13% in recent days, putting pressure on global inflation and inflation expectations, Ha told a government press meet on Wednesday.

According to the Deputy Governor, many major central banks around the world, including the U.S. Federal Reserve, have become more cautious about cutting interest rates. Some institutions have even signaled the possibility of raising rates as early as this month to counter inflation.

“These developments have put pressure on the exchange rate and the domestic money market,” Ha said.

He noted that in the first three days of this week, the exchange rate has tended to “edge up and increase compared with the end of 2025.” As of mid Wednesday, the average USD rate on the interbank market stood at VND26,220 per dollar.

Since late 2025, the global economy has seen increasingly complex developments, posing significant challenges for monetary policy management. "Vietnam's central bank (SBV) has been implementing monetary policy in a proactive and flexible manner to control inflation, stabilize the macroeconomy, and support economic growth."

Currently, market interest rates remain broadly stable in line with supply and demand, while interest rates on new loans have shown a downward trend compared with last year. Credit growth has been positive, reaching VND18,860 trillion ($719.3 billion) as of February 26, up 1.4% from the end of last year and nearly 20.2% year-on-year.

Regarding the exchange rate, by the end of February - before tensions in the Middle East intensified - the interbank USD rate stood at VND26,044, down 0.94% compared with the end of 2025. Foreign currency supply was abundant, fully meeting the needs of businesses and the economy.

Looking ahead, the SBV stated that it will continue managing monetary policy flexibly, in close coordination with fiscal policy, prioritizing macroeconomic stability, and supporting sustainable growth.

Deputy Governor Ha affirmed that the regulator will operate in line with market developments and require credit institutions to publicly disclose lending interest rates. The central bank will deploy a synchronized set of tools to stabilize the exchange rate and ensure the smooth functioning of the market.

At the same time, it will continue to guide safe credit growth, focusing on production and business activities as well as key growth drivers, while strictly controlling high-risk lending. Credit approval procedures will also be simplified and digitized to facilitate access to capital for individuals and businesses.

At a monthly cabinet meeting on Wednesday, Prime Minister Pham Minh Chinh ordered ministries, sectors, and localities to proactively develop operational scenarios appropriate to the rapidly changing global economic context, while remaining steadfast in the target of 10% or more GDP growth, maintaining macroeconomic stability, and preventing a situation where "inflation is controlled but growth is lost" or vice versa.

The socio-economic situation in the first two months of the year continued to show many positive signs, with many indicators improving year-on-year, Chinh noted.

In particular, the macroeconomic situation remained stable, inflation was controlled, and major economic balances were ensured. State budget revenue in the first two months reached VND601.3 trillion ($22.93 billion), equivalent to 23.8% of the year forecast, an increase of 13.1% compared to the same period last year, despite the government implementing many policies to reduce and extend taxes, fees, and charges for businesses.

External trade continued to grow strongly. Total import and export turnover reached $155.7 billion, an increase of 22.2% year-on-year, of which exports rose by 18.3% and imports surged by 26.3%. The trade deficit was approximately $2.98 billion, mainly due to increased imports of production materials to serve economic activities.

Development investment also recorded many positive signs. Disbursement of public investment capital reached approximately 5.6% of the year plan, up about VND10.9 trillion ($415.72 million) compared to the same period last year. Newly registered FDI reached over $3.5 billion, up 61.5%, while implemented FDI reached $3.2 billion, a 8.8% increase.

The business environment continued to improve with nearly 64,500 businesses entering or re-entering the market, up 29.4%.

The Prime Minister, however, noted that the economy still faces many challenges. The pressure to manage the macroeconomy remains significant, especially in the context of a volatile global economy and geopolitics. Factors such as inflation, exchange rates, interest rates, and energy security may be affected by ongoing conflicts in the Middle East and other regions.