Vietnam’s dong falls to new low against the dollar

On Wednesday morning the State Bank of Vietnam once again raised the reference price for $1 to VND23,046, an increase of VND16 from the previous day, and up nearly VND50 from a month ago.  

The Vietnamese currency has lost VND212 to the dollar, or 0.9 percent, since the beginning of this year.

Commercial banks also updated their price lists this morning, raising selling prices for the dollar sharply by VND50-80 compared to yesterday, significantly higher than the free market rate. 

State-owned Vietcombank sold the greenback at VND23,395 Wednesday morning, VND95 higher than Monday. 

Vietinbank, one of Vietnam’s three biggest lenders, sold the dollar at VND23,362, while Techcombank sold it at VND23,395.

At the same time, smaller banks such as Sacombank and Eximbank have also raised their selling prices to VND23,398 and VND23,410, up VND88 and VND100 respectively compared to the end of Monday.

On the free market, currency exchange points at Ha Trung Street, Hanoi sold the dollar at between VND23,290 - 23,310, about VND90 lower than the official market.

In the last two weeks, the greenback has been steadily rising against the dong. 

In its recent report, the analytics body of securities firm Saigon Securities Incorporation (SSI), SSI Research, said that the U.S.'s first quarter GDP growth 3.2 percent, exceeding forecasts, has caused the dollar to rise sharply. 

The DXY, which measures the value of the USD relative to a basket of foreign currencies, soared to a peak of 98.2 on April 25, before gradually settling back to 97.52 on Tuesday. 

"International developments, along with the sudden narrowing of the VND-USD interest rate gap on the interbank market had a strong impact on market sentiment, causing the USD/VND exchange rate to rise for both banks and the free market," SSI Research said. 

With the supply of dollars falling and pressure from Vietnam’s worsening balance of trade in the first quarter, the VND-USD exchange rate was under pressure too. Vietnam posted a trade deficit of $700 million in April, compared with a $1.63 billion surplus in March.

"It is likely that the dollar will continue trading at around VND23,300 in the near future," reports SSI Research. 

Previously, Bao Viet Securities Company (BVSC) had said that it is likely that Vietnam’s central bank will continue to raise the exchange rate slightly in order to create a buffer, in case the market rate experiences unexpected fluctuations.