Vietnam central bank's exchange rate reaches another peak
The State Bank of Vietnam has raised its reference exchange rate to another high this week following the U.S. Federal Reserve's first interest rates hike in three years.
The Vietnamese central bank raised its exchange rate for the fourth consecutive session, bringing it to VND25,632. This marks the highest level in a year, as the bank has been increasing rates following three weeks of stability and minor declines. Commercial banks are permitted to trade U.S. dollars within a 5% band of this rate.
BIDV increased its exchange rate by 0.04% to VND26,185. On the black market, the greenback appreciated by 0.19% to VND25,820. The U.S. Federal Reserve lifted its benchmark rate by 25 basis points to 3.75%-4% on Thursday, the first increase since July 2023. This move follows a series of raises throughout the year. The greenback strengthened after the decision, with the Dollar Index reaching around 100.34, its highest in seven weeks.
The index has increased by about 1.3% in a week and 0.7% from a month ago. Analyst Nguyen Hoan Nien from Shinhan Securities noted that the Fed's rate hike could intensify pressure on the USD/VND exchange rate in the coming weeks. He believes the rate might stabilize again by year-end if the Fed does not raise interest rates further.
However, he emphasized that actual developments will depend on various factors and require further monitoring.
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