Greenback cools with new central bank reference rate

The State Bank of Vietnam (SBV) cut the central exchange rate to VND23,946 per U.S. dollar Friday, soon after the dollar rose to VND23,951, the highest so far this year.

The previous peaks were VND23,881 on Tuesday and VND23,918 on Wednesday. Before Friday’s fall, the central exchange rate had moved up or remained flat. The dollar-dong rate has risen very fast this month from VND23,757 on August 1.

Per the central bank’s (SBV) trading band of +-5%, commercial banks could set their exchange rates between VND23,748 and VND25,143.

On Friday, the SBV set the reference exchange rate at VND23,400-25,093.

Exchange rates at major banks in Vietnam moved in the same direction. At state-controlled Vietcombank, one of the country's "Big 4" banks, Friday’s buying and selling rates were VND23,630 and VND23,970 per U.S. dollar, respectively, down from VND23,700 and VND24,040 on Thursday.

BIDV, also a “Big 4” bank, set buying and selling rates of the greenback at VND23,650 and VND23,950 on Friday, down from VND23,720 and VND24,020 from a day ago, respectively.

VietinBank, yet another “Big 4” bank, set its buying and selling rate at VND23,595 and VND24,015, down from Thursday’s VND23,640 and VND24,060, respectively.

Corresponding figures at Techcombank, a leading private lender, were VND23,660 and VND24,010 on Friday, down from VND23,700 and VND24,050 the day before, respectively.

The rise of the dollar is a short-term development and will stabilize soon, said Ngo Dang Khoa, country head of markets and securities services at HSBC Vietnam.

Although pressures remain, the VND can soon rebound as the USD is expected to decline soon amid the U.S.’s Federal Reserve (Fed) approaching the end of its financial tightening regimen, he added.

Another reason is Vietnam’s economy still has bright spots like a high trade surplus, growing foreign direct investment (FDI), and the government’s policies for economic recovery. HSBC’s research body retained its projection of the exchange rate at VND23,450 per $1 at the end of the third quarter of 2023 and VND23,350 at the end of the year.