Vietnamese Dong: Trade deal hopes and stable FX – Commerzbank
Commerzbank analysts discuss Vietnam’s progress toward a US trade deal, which officials say is essentially complete and could be signed soon. The agreement aims to address tariffs, transshipment and regulatory standards, potentially easing a key growth headwind.
Commerzbank analysts note that Vietnam is near finalizing a US trade deal, which would address tariffs, transshipment, and regulatory standards. This could alleviate a significant growth obstacle for the country. Despite ongoing investigations and high duties, the US dollar to Vietnamese dong (USD/VND) exchange rate has remained relatively stable, with the State Bank of Vietnam maintaining the fix to curb volatility.
Deputy Prime Minister Pham Gia Tuc confirmed that Vietnam has submitted its final comments to US counterparts, hoping to sign the agreement soon. Key issues include transshipment and non-tariff barriers. Vietnam presently faces a 12.5% tariff on exports to the US due to a Section 301 investigation over forced labor. The US has two ongoing investigations into Vietnam regarding industrial overcapacity and intellectual property protection.
Certain goods are subject to a 40% tariff if they are transshipped. A positive trade deal could bolster Vietnam's medium-term growth prospects by narrowing the tariff gap with regional competitors, potentially enhancing its export competitiveness. Currently, USD/VND is trading around 25,893 and has been range-bound between 26,050 and 25,800 since mid-September.
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