Vietnam shares end in red as US dollar climbs to new high

The U.S. dollar has strengthened against the Vietnamese dong to reach a fresh high on Friday, hampering investor sentiment on the stock market.

The State Bank of Vietnam (SBV) raised its reference USD/VND exchange rate by VND8 on Friday, marking the fourth straight day of increase to VND24,298 a dollar, an all-time high. The rate has increased by a total VND35 this week.

With a ±5 trading band, commercial banks can quote the greenback in a range of VND23,083-25,512.

Meanwhile, the SBV kept its offer unchanged at VND23,400-25,450 a dollar for buying and selling, at which the banking regulator can intervene in the forex market.

On the interbank market, the USD/VND rate increased VND57 against Wednesday to VND25,400 at Thursday’s close. The rate has risen 4.7% in the year to date.

Local commercial banks such as Vietcombank, BIDV, Techcombank, and Eximbank unanimously raised their selling price to the upper limit, a practice maintained over the past three weeks. Since the start of this year, the USD selling price has risen 4.4%, including circa 3% in October and November.

The U.S. Dollar Index (DXY), which compared the greenback with a basket of strong currencies, was trading at 106.55 at the time of writing, off an intraday high of 106.95.

Since November 5, when the U.S. presidential election took place, the index has climbed 3% thanks to the Trump effect.

The local stock market ended the day in the red, with the benchmark VN-Index losing 1.08% to close at 1,218.57. As many as 305 stocks fell, while 75 ended in the green and 49 stayed still.

Foreign investors net sold another VND1,317 trillion ($51.87 million) on the Ho Chi Minh Stock Exchange on Friday. So far this year, they have net sold VND73.76 trillion ($2.9 billion), according to exchange data.

Nguyen Viet Duc, head of digital business at VPBank Securities, told The Investor that a stronger dollar was attributable to the recent strong corrections. Historical data shows an inverse correlation between the USD/VND rate and the VN-Index, he said.

If the DXY continues to go north, the VN-Index may re-test the bottom at 1,200 points by the end of this year, Duc added.