The U.S. Federal Reserve’s (Fed) decision to keep interest rates unchanged has eased the USD price decline in Vietnam and some analysts expect it to increase again in the near future.
The USD has appreciated around the world after the Fed decided to keep interest rates unchanged and gave no signs of a rate cut.
The U.S. Dollar Index (DXY), measuring fluctuations in the greenback with six major currencies, namely EUR (EU), JPY (Japan), GBP (UK), CAD (Canada), SEK (Sweden) and CHF (Switzerland), has expanded 0.12% to 103.51.
Previously, at a press conference, Fed chairman Jerome Powell said that the agency is looking for signs inflation is on a sustainable path down.
Upcoming inflation data will dictate how soon the Fed moves ahead on rate cuts, he said.
Traders believe in a 38% probability that the Fed will cut interest rates in March, down from 59% a day earlier and 89% a month ago.
Amid the increase in the world USD price, that in Vietnam decreased slightly by only VND15 per USD, showing that the decline has eased compared to previous trading sessions.
On February 1, the State Bank of Vietnam (SBV) reduced the reference exchange rate again by VND30 to VND23,960 per USD, down VND76 or 0.31% compared to the beginning of the week.
At commercial banks, continuing the downward trend from previous sessions, the USD price on the February 1 fell VND15 per USD. At Vietcombank, the USD was trading for VND24,210-24,580 per USD (buy - sell).
On the black market, the USD price dropped sharply by VND250-200 per USD to around VND24,700-24,800 per USD (buy - sell).
The domestic USD price dropped in the context of a sharp increase in gold bullion prices, which gained over VND1.5 million per tael ($61.6) in the past three days to a one-month high, widening the gap with the rest of the world. The SJC gold bullion price now stands at around VND76-78.3 million ($3,121-$3,215) per tael (buy - sell).
However, some experts believe there are pressures for the USD price to hike as the gap in monetary policy between the Fed and SBV may widen. Some global and regional geopolitical fluctuations may have relatively negative impacts on the VND.
Therefore, the USD is expected to maintain its strength in the first months of 2024, while the yuan (CNY) will continue to weaken in the context of China's slower than expected economic recovery, they said.