USD price likely to be VND27,200 in Q3, VND26,800 in Q4: UOB

Singaporean bank UOB says pressure on the Vietnamese dong will inevitably build as growth uncertainties deepen, with its updated USD/VND forecasts being 26,500 in Q2, 27,200 in Q3, 26,800 in Q4, and 26,500 in Q1/2026.

The VND weakened to a fresh record low of about 25,800 per USD in the aftermath of the U.S. administration’s April 2 announcement on massive 46% tariffs on Vietnamese goods. The Vietnam rate ranked one of the highest President Trump slapped on its global trading partners.

The State Bank of Vietnam (SBV), Vietnam's central bank, set the daily reference exchange rate for the U.S. dollar at 24,923 VND/USD on Friday, April 11, down VND41 from the previous day. With the current trading band of +/- 5%, the ceiling rate applicable for commercial banks during the day is VND26,169 per USD and the floor rate VND23,677.

Standard Chartered Bank on March 27 adjusted its USD/VND exchange rate forecast, "reflecting shifts in global and regional economic conditions". Specifically, it raised its mid-year projection to VND26,000 (previously VND25,450) per USD and its end-2025 projection to VND25,700 (previously VND25,000).

UOB added that the overall and core inflation staying below official target of 4.5% in Q1/2025 and for most of 2024 has opened the possibility for the SBV to ease its policy stance.

"At the current juncture, we expect the SBV to keep its main policy rate steady for now, with the refinancing rate held at 4.5%. However, the risks are biased towards rate cuts in view of downside pressures on business and exports," the bank said in a release on Friday.

GDP projections

UOB's GDP growth predictions for Vietnam in Q2 and Q3 are 6.1% and 5.8%, respectively.

Vietnam’s real GDP in Q1/2025 slowed to 6.93% year-on-year, from the 7.55% expansion in Q4/2024.

UOB said this is slightly below its and consensus median forecast of 7.1%. The slower pace is partly due to festive season of Lunar New Year holidays, as factory activity moderated during the quarter while exports momentum picked up.

The massive 46% reciprocal tariff President Trump announced on April 2 to slap against Vietnam surprised the market. Trump on Wednesday dropped his tariffs for countries reaching out to the U.S. to negotiate to 10% for 90 days. The 90-day reprieve is applied to nearly 90 nations, including Vietnam and except for China.

While there are efforts underway to negotiate with the U.S., the outcome remains uncertain. "Unless there are reversals in the meantime, Vietnam would need to brace for the impact of the tariff, including the postponement or cancellation of export orders and investment plans being put on hold," UOB argued.

In view of the significant downside risks, UOB lowered its for Vietnam’s GDP growth in 2025 by 1% percentage point to 6% from previous call of 7%. The actuall figure for 2024 was 7.09%. The National Assembly, Vietnam's legislature, recently adjusted its 2025 GDP growth target from 6.5-7% for 2025 to at least 8%.

Vietnam’s real GDP moderated to 6.93% year-on-year in Q1/2025, according to the General Statistics Office (GSO). The pace was slightly below UOB's and consensus view of 7.1% and behind the 7.55% growth in Q4/2024.

The slower pace is partly due to festive season of Lunar New Year holidays, as factory activity moderated during the quarter while exports momentum picked up.

Manufacturing output slowed to 9.3% year-on-year from 9.97% in Q4/2024. The latest PMI data suggest that Vietnam’s manufacturing sector returning to expansion zone in March after three straight months contraction.

ADB stated in a release on Tuesday: "The evolving global economic environment, significantly affected by recent tariff-related announcements by the U.S. and geopolitical tensions, is posing significant challenges for economies dependent on export-driven manufacturing like Vietnam."

"External uncertainties - such as tariff escalations, reciprocal measures, the prolonged war in Ukraine, and ongoing instability in the Middle East - could constrain near- to medium-term global economic growth. Moreover, a slowdown in the U.S. and China, Vietnam's major trading partners, could further affect economic prospects," it added.

The US accounted for 30% share of Vietnam's exports of $402 billion in 2024 and its largest market, followed by China (15%) and South Korea (6%), according to UOB.

The major products sold to the U.S. in 2024 include electrical products HS85 ($41.7 billion), mobile phones and related HS84 ($28.8 billion), furniture HS94 ($13.2 billion), footwear HS64 ($8.8 billion), apparel knitted HS61 ($8.2 billion), and apparel nonknitted HS62 ($6.6 billion). Products from these sectors accounted for nearly 80% of the shipments that Vietnam sent to the U.S. in 2024.

While there are efforts underway by Vietnamese officials to negotiate with the US, the outcome remains highly uncertain. Vietnam's Party General Secretary To Lam offered to reduce tariff rates to zero in a phone call with President Trump on April 4. A delegation led by Deputy PM Ho Duc Phoc is now in the U.S. for negotiations.

Vietnam is particularly vulnerable to trade restrictions and would need to brace for the impact of the tariff spreading through ahead, due to the open nature of its economy: export constitutes 90% of Vietnam’s GDP, second highest after Singapore (174%) in ASEAN, as well as its outsized exposure to the U.S. market, UOB reported.