Vietnam currency to strengthen towards year-end: UOB

By Quang Minh
Fri, May 3, 2024 | 7:58 pm GMT+7

Vietnamese dong (VND), the local currency, is expected to appreciate against the greenback in H2/2024, with the U.S. Federal Reserve likely to cut interest rates twice this year.

A clerk counts U.S. dollar bank notes in a Hanoi-based bank. Photo by The Investor/Trong Hieu.

A clerk counts U.S. dollar bank notes in a Hanoi-based bank. Photo by The Investor/Trong Hieu.

“Our macroeconomic team maintains expectations of two 25 basis-point cuts across 2024, in September and December, although the risk is still tilted towards the Fed delaying cuts even further,” analysts with Singapore-based UOB bank said Friday.

In forex space, the impact of a later start to the Fed’s easing cycle on the USD is clear. It is all but certain that the USD will stay strong, at least in Q2/2024.

“But, consistent with our view of lower U.S. rates going forward, we reiterate that USD would weaken anew, but starting later in Q3/2024,” they said, adding the key risk to their bearish USD view is that the Fed keeps its rates unchanged.

“We expect Asia FX to stay weak for the remainder of Q2. Our expectation of an eventual Asia FX recovery is still intact… starting from Q3 instead. The key risk to our cautiously positive view on Asia FX is a sudden CNY [Chinese yuan] devaluation.”

Regarding the VND, the analysts highlighted that the USD/VND rate went up to a new high of above 25,463 in April as the greenback gained against Asian peers.

With receding Fed rate cut expectations, the USD/VND rate is likely to stay elevated for a while longer. The State Bank of Vietnam, the country's central bank, said it had intervened in the FX markets in April and this may help to keep volatility in check.

“Beyond near-term external headwinds, we expect the VND to draw support from resilient fundamentals and a subsequent recovery in the CNY. Our updated USD/VND forecasts are 25,600 in Q2/2024, 25,100 in Q3, 24,800 in Q4 and 24,600 in Q1/2025,” they predicted.

Meanwhile, Bank of America last month projected the VND to weaken by an additional 1% by the year-end after sliding sharply against the U.S. dollar since the start of this year.

“We revise our forecasts in anticipation of further modest VND depreciation pressure to 25,600 by end-Q2 and ultimately USD/VND at 25,700 by year-end,” the analysts said.

Comments (0)
  • Read More
Indonesian President pledges to continue promoting new capital’s development

Indonesian President pledges to continue promoting new capital’s development

Indonesian Forestry Minister Raja Juli Antoni announced on Monday that President Prabowo Subianto remains committed to advancing the development of the new capital, Nusantara (IKN), located in East Kalimantan province.

Southeast Asia - Mon, October 21, 2024 | 11:01 pm GMT+7

Thailand ready for new economic stimulus efforts

Thailand ready for new economic stimulus efforts

The Thai Finance Ministry is preparing additional stimulus measures, including plans to promote tourism and encourage spending towards the end of the year to contribute to speeding up the recovery of the economy, according to Deputy Finance Minister Julapun Amornvivat.

Southeast Asia - Mon, October 21, 2024 | 10:57 pm GMT+7

Malaysia announces record budget plan for 2025

Malaysia announces record budget plan for 2025

Malaysian Prime Minister Anwar Ibrahim has submitted to the parliament a budget spending plan for 2025 worth MYR421 billion (about $97 billion), the biggest in history, in efforts to accelerate the country’s journey to become an economic powerhouse in Asia and position it for sustainable growth and resilience.

Southeast Asia - Mon, October 21, 2024 | 10:54 pm GMT+7

Indonesian President announces new cabinet line-up

Indonesian President announces new cabinet line-up

Indonesia's new President Prabowo Subianto on Sunday unveiled the so-called “red and white” cabinet, including ministers, deputy ministers and heads of agencies at the State Palace.

Southeast Asia - Mon, October 21, 2024 | 10:52 pm GMT+7

Leading Norway firms showcase innovations in HCMC green economy expo

Leading Norway firms showcase innovations in HCMC green economy expo

Eight leading Norwegian companies are showcasing groundbreaking innovations and sustainable solutions that enable green transition in different sectors as they seek to deepen presence in Vietnam.

Companies - Mon, October 21, 2024 | 8:00 pm GMT+7

Vietnam government proposes the state as sole investor in nuclear power

Vietnam government proposes the state as sole investor in nuclear power

The Vietnamese government has proposed that the State is the sole investor in nuclear power development, under its draft amended law on electricity.

Energy - Mon, October 21, 2024 | 6:27 pm GMT+7

Luong Cuong elected as Vietnam State President

Luong Cuong elected as Vietnam State President

Luong Cuong, a permanent member of the Party Central Committee’s Secretariat, was elected by the parliament on Monday as Vietnam’s State President for the term 2021-2026.

Politics - Mon, October 21, 2024 | 5:21 pm GMT+7

Vietnam aims for 7-7.5% economic growth in 2025: Prime Minister

Vietnam aims for 7-7.5% economic growth in 2025: Prime Minister

The government targets a national economic expansion of 7-7.5% in 2025, 0.5 percentage points higher than the goal set by the National Assembly, Prime Minister Pham Minh Chinh said on Monday.

Economy - Mon, October 21, 2024 | 4:37 pm GMT+7

Warburg Pincus-invested IP developer BW builds 10th project in Vietnam for 2024

Warburg Pincus-invested IP developer BW builds 10th project in Vietnam for 2024

BW Industrial Development JSC, a joint venture between American private equity giant Warburg Pincus and Vietnamese leading industrial developer Becamex, has kicked off the construction of BW Tan Hiep Logistics Park in Dong Nai province.

Industrial real estate - Mon, October 21, 2024 | 4:15 pm GMT+7

Vietnam private lender VietABank has 8 major shareholders owning 30% stake

Vietnam private lender VietABank has 8 major shareholders owning 30% stake

Vietnam’s private lender VietABank has eight major shareholders – four institutions and four individuals – owning over 1% of its charter capital each, accounting for almost 30% in total.

Banking - Mon, October 21, 2024 | 3:47 pm GMT+7

Vietnam’s first minibus brand Kim Long X9 launched

Vietnam’s first minibus brand Kim Long X9 launched

Vietnam’s first indigenously produced minibus rolled off the production line Saturday, with executives of Kim Long Motor Hue JSC hailing it as a local auto industry milestone.

Companies - Mon, October 21, 2024 | 3:22 pm GMT+7

Vietnam construction giant Coteccons not to allow bad debt hike this year

Vietnam construction giant Coteccons not to allow bad debt hike this year

With bad debts among its debtors doubling to VND2.24 trillion ($88.84 million) in the past three years, Vietnamese construction giant Coteccons says it will not allow either bad debt or provisions thereof to increase this fiscal year.

Companies - Mon, October 21, 2024 | 3:09 pm GMT+7

Central Vietnam province okays 210 hectares for $2.2-bln LNG power project

Central Vietnam province okays 210 hectares for $2.2-bln LNG power project

Vietnam's central province of Nghe An has approved an allocation of 210 hectares for the Quynh Lap LNG-fired power plant project with an investment of $2.15 billion.

Energy - Mon, October 21, 2024 | 11:30 am GMT+7

Japan retailer Aeon to build $35 mln mall in northern Vietnam

Japan retailer Aeon to build $35 mln mall in northern Vietnam

Japanese retailer Aeon will invest $35 million in building a mall in Phu Ly town, Vietnam’s northern province of Ha Nam.

Industries - Mon, October 21, 2024 | 10:59 am GMT+7

Major Vietnam rice stocks in distress despite rosy export outlook

Major Vietnam rice stocks in distress despite rosy export outlook

Stocks of several major Vietnamese rice exporters, once prominent on exchanges, have dropped significantly as they grapple with financial distress.

Companies - Mon, October 21, 2024 | 8:33 am GMT+7

Vingroup subsidiary's 9-month profit surpasses year's target

Vingroup subsidiary's 9-month profit surpasses year's target

Vietnam Exhibition Fair Centre JSC, a subsidiary of conglomerate Vingroup, posted an after-tax profit of VND264 billion ($10.49 million) in the first nine months of 2024, exceeding the year's target of VND250 billion, despite a year-on-year decrease of 23%.

Companies - Mon, October 21, 2024 | 8:10 am GMT+7