Solid economic fundamentals to buoy Vietnamese dong: UOB exec
Vietnam’s solid economic fundamentals and an expected recovery of the Chinese yuan are likely to provide support for the Vietnamese dong, the local currency, in the time ahead, an executive with Singapore-based lender UOB has said.
Vietnam is well positioned to grow sustainably thanks to its key role in the global supply chain, diversified manufacturing, young demographic, and abundant workforce, Dinh Duc Quang, country head of global markets at UOB, said at a roundtable in Ho Chi Minh City on Thursday.
Speaking at the event, Abel Lim, head of wealth management advisory and strategy at UOB, commented that since inflation has been stronger than expected this year, the Fed has signalled it will need to keep interest rates high for longer. Rate cuts are only expected when it becomes more confident that inflation is slowing towards 2%.

Dinh Duc Quang (left), country head of global markets at UOB; and Abel Lim, head of wealth management advisory and strategy at UOB, speak at a roundtable in Ho Chi Minh City, May 23, 2024. Photo courtesy of the bank.
To this backdrop, the U.S. dollar has strengthened and led to weakness in Asian currencies, including the VND.
“Nonetheless, UOB’s view is that the Fed will start cutting interest rates twice this year, in September and December. Furthermore, we expect the State Bank of Vietnam (SBV) to keep interest rates unchanged this year,” Lim noted.
As such, the UOB expects the U.S. dollar strength to ease in the months ahead, and for the VND to recover towards 24,000 by the end of 2024.
With odds of the Fed cutting rates waning, the USD/VND exchange rate may stay elevated for longer than expected. However, with the SBV's intervention in April, the exchange rate can be expected to move in a controlled range, according to UOB researchers.
The Vietnamese dong (VND) is projected to appreciate against the U.S. dollar in the second half of this year when the U.S. Fed is set to cut interest rates, while VND interest rates are poised to stay steady or bounce back toward the year-end, they said.
Their updated USD/VND forecasts are 25,600 in Q2/2024, 25,100 in Q3, 24,800 in Q4, and 24,600 in Q1/2025.
Bright GDP growth prospects
After the Vietnamese economy showed positive growth momentum and resilience in Q1/2024, the key factors underpinning our positive outlook for the year ahead is strong domestic demand, said Abel Lim.
Manufacturing and export activities have been robust, with exports boosted by demand for electronics and phones.
A recovery in the semiconductor cycle, stable growth in China and Asia, and potential rate cuts by major central banks in the coming months will also be positive for Vietnam’s economy.
Foreign direct investment (FDI) inflows, particularly in the manufacturing and processing sectors, reflect sustained investor confidence in Vietnam’s business environment. Even more so because of the ongoing re-configuration of global supply chains as the West seeks to lower their reliance on China.
In addition, investments into infrastructure projects and digital transformation is likely to contribute to Vietnam’s long-term growth and competitiveness.
Lim reaffirmed the bank's 2024 growth forecast for Vietnam at 6%.
He pointed out challenges to economic growth, which are persistent inflation and geopolitical tensions that could disrupt global trade and commodity prices.
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