USD/VND exchange rate remains under upward pressure amid inflation risks

The Vietnamese dong is facing persistent pressure against the U.S. dollar, as rising import-driven inflation risks complicate policymakers’ task of balancing price stability, exchange rate management and economic growth.

Movements in the USD/VND exchange rate in early April have drawn heightened market attention, as global and domestic macroeconomic pressures continue to converge.

The State Bank of Vietnam (SBV) - the central bank - on Tuesday set the daily reference exchange rate at VND25,108 per USD, up VND2 from the previous day.

With the current trading band of +/- 5%, the ceiling rate applicable for commercial banks during the day is VND26,363 per USD and the floor rate VND23,853 per USD.

At 1 p.m. Tuesday, the buying rate at Vietcombank was VND26,143/USD and the selling rate VND26,363, both up VND2 from Monday, respectively.

At Vietinbank, the buying and selling rates were VND26,139 and VND26.363, up VND174 and up VND2, respectively.

For SeABank, the respective figures were VND26,143 and VND26,363, both up VND2 from Monday.

Vietcombank and Vietinbank are state-controlled banks and among the Top 4 Vietnamese banks, while SeABank is a private bank. The above figures refer to payments via bank transfer, instead of cash.

While official rates have not fluctuated sharply since late March, they remain elevated.

In contrast, the parallel market - often reflecting market sentiment more clearly - has shown notable volatility. After hitting a record high of VND28,055 per USD around March 30-31, the “black market” rate eased in early April to around VND27,000-27,400, down roughly VND650-1,000 dong, suggesting initial impact from regulatory interventions.

Globally, the U.S. dollar remains firm, with the U.S. Dollar Index at 100.06, holding above a key psychological level despite a slight pullback from end-March.

The greenback continues to draw support from expectations that the Federal Reserve will keep monetary policy tighter for longer, as inflation - particularly energy prices - shows limited signs of easing. Geopolitical tensions in the Middle East have also reinforced the dollar’s safe-haven appeal.

Domestically, March marked an unusually volatile period. The parallel market exchange rate surged 5.1% in a single month to a record high, partly driven by aggressive liquidity tightening by the central bank.

The SBV drained nearly VND115 trillion ($4.37 billion) via open market operations (OMO) - the highest level since October 2024 - in a bid to absorb excess liquidity and stabilize the currency.

At the same time, Vietnam’s trade balance shifted into deficit, with a cumulative shortfall of $3.51 billion in the year to mid-March ($3.64 billion in the year to the end of March), increasing demand for foreign currency and adding pressure on the exchange rate. Banking system liquidity also tightened, with interbank rates jumping from 3.7% to 9.3% in the second half of March.

Deposit rates at commercial banks have also risen, with increases ranging from 0.1 to 1.4 percentage points across both joint-stock lenders and the “Big Four” (wholly state-owned Agribank, and state-controlled lenders BIDV, Vietcombank and Vietinbank). Some banks have offered rates exceeding 9% per year for terms of six months or longer to attract funds.

The trend reflects an imbalance between credit growth and deposit mobilization. In the year to end-Q1/2026, credit had expanded about 2.15%, while deposits rose just 0.44%, forcing banks to raise rates to maintain liquidity.

Looking ahead, analysts say exchange rate pressure is unlikely to fully ease in the short term. Brokerage MBS forecasts suggest the USD/VND rate could trade in a range of 26,350-26,700 in Q2.

The central bank is expected to continue deploying flexible policy tools, including liquidity absorption via OMO and forward dollar sales - currently priced at around VND26,850 per dollar for 180-day tenors - to stabilize the market.

However, rising import costs and a weakening VND are increasing the risk of imported inflation, posing a dual challenge for policymakers as they seek to contain inflation while supporting growth and maintaining currency stability.

The outlook will depend largely on Federal Reserve policy, global geopolitical developments and the SBV’s policy agility in the months ahead.