Vietnam dong likely to strengthen later in 2024: economist
The Vietnamese dong, the local currency, is anticipated to strengthen later this year against the U.S. dollar, reducing its depreciation to as low as 3.5-4% this year from 5% currently, economist Can Van Luc has said.
Speaking at the Vietnam Wealth Advisor Summit 2024, themed “Adapting to Uncertainties”, in Hanoi on Thursday, Luc said pressures on the VND have waned as the USD has been on the decline globally.

Can Van Luc, chief economist at Hanoi-based BIDV, speaks at the Vietnam Wealth Advisor Summit 2024 in Hanoi, June 6, 2024. Photo courtesy of Dau Tu (Investment) newspaper.
The U.S. Dollar Index (DXY), which measures the dollar's strength, has gained 3.4% so far this year because the Fed has delayed cutting rates and the U.S. economy has shown a better-than-expected performance. However, the DXY has decreased over the past two weeks, Luc, who is chief economist at Hanoi-based BIDV, elaborated.
Furthermore, the interbank overnight interest rate on the VND has climbed and hit 5% per annum, close to that of USD loans at 5.25-5.5%. This means that the interest rate gap has reduced, relieving pressure on the USD/VND exchange rate, Luc added.
Echoing Luc, Truong Van Phuoc, former acting chairman of the National Financial Supervisory Commission, forecast the USD/VND rate not to surpass 26,000 this year.

Truong Van Phuoc, former acting chairman of the National Financial Supervisory Commission, speaks at the Vietnam Wealth Advisor Summit 2024 in Hanoi, June 6, 2024. Photo courtesy of Dau Tu (Investment) newspaper.
Vietcombank quoted the greenback at VND25,183-25,453 a dollar for bids and asks, respectively, on Friday, flat from Thursday, while the central bank kept its central reference USD/VND rate at 24,241.
The Fed may cut rates next month, depending on the upcoming presidential election in November, Phuoc commented, adding that markets are betting the DXY will fall to below 100 from 104 now.
He forecast the DXY would continue falling until 2027, trading in the range of 95-105. The Fed’s federal funds rates will likely decrease to 2.75-3% in the coming three years, thus easing pressure on the VND.
Phuoc commented that the State Bank of Vietnam (SBV) should not have let the VND devalue up to 5% against the USD. The magnitude of the VND’s devaluation should be equal to Vietnam’s consumer price index (CPI).
He recommended the SBV maintain low interest rates to support economic growth. The interest rate level should be kept at the CPI plus 3-4 percentage points.
In this regard, Can Van Luc expected the SBV’s financing rate may go flat while deposit interest rates may go up in the second half of this year.
Prime Minister Pham Minh Chinh has asked the SBV to work out measures to further cut lending interest rates by 1-2 percentage points by cutting expenses and applying information technology.
This will cause the net interest margin (NIM) at banks to lower from 3.5% currently to 3% or less, Luc said.
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