USD weakens slightly against VND after Fed holds rates steady

The U.S. dollar slid against the Vietnamese dong (VND) on Thursday morning hours after the U.S. Federal Reserve (Fed) kept its policy rate unchanged in the 5.25-5.50% range.

The Vietnamese central bank lowered its benchmark USD/VND rate by VND4 to VND24,242 a dollar from April 26, the last day before a five-day break.

With a trading band of ±5%, commercial banks are allowed to quote the greenback at VND23,029-25,454.

At state-owned Vietcombank, the largest forex trader in the country, the greenback was offered at VND25,084-25,454 for bids and asks, down VND4 on both sides, from April 26.

Similarly, BIDV quoted the USD at VND25,144-25,454 a dollar, down VND14 for bids and VND4 for asks, from April 26.

On the unofficial market, gold shops quoted the greenback at VND25,665-25,770 for buying and selling, down VND40 on both sides.

Bank of America said in a note last week that it projected the Vietnamese currency to drop by an additional 1% to 25,600 by end-Q2, but ultimately to 25,700 by year-end.

The State Bank of Vietnam’s standing deputy governor Dao Minh Tu said on April 19 that the dong had depreciated 4.9% against the dollar year-to-date, but the devaluation was smaller than several regional peers.

A week later, Tu reiterated that the Vietnamese central bank stood ready to intervene to contain the devaluation of the dong, including selling hard currency from its forex reserves.