Vietnam currency to strengthen towards year-end: UOB
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.
“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.
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