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Vietnam's exchange rate unchanged following Fed's interest rate hike

By Minh Son   May 10, 2022 | 05:53 pm PT
Vietnam's exchange rate unchanged following Fed's interest rate hike
US dollar and Vietnamese dong banknotes seen at a bank in Ho Chi Minh City, Vietnam. Photo by VnExpress/Anh Tu
Most currencies of developing countries have fallen against the U.S. dollar after the Federal Reserve raised interest rates last week, but not for the Vietnamese dong.

The U.S. Dollar Index continues to rise by 0.5 percent this week, resulting in depreciation of emerging market currencies. The Chinese yuan fell by 1.1 percent, followed by Indian rupee (0.6 percent) and Thai baht (0.34 percent).

But the Vietnamese dong stayed unchanged last week, bucking the downward trend of regional currencies.

Top brokerage SSI Securities Corporation attributed the stabilizing Vietnamese dong to the abundant supply of U.S. dollar to Vietnam.

For the first four months this year, Vietnam’s trade surplus to the U.S. and foreign direct investment disbursement topped $2.5 billion and $5.9 billion, respectively.

Overseas remittance also rose by 14 percent to $1.8 billion in the first quarter, according to the State Bank of Vietnam.

Vietnam’s interbank exchange rate has been hovering around VND22,960 per U.S. dollar, while that of commercial banks slipped marginally to VND22,780/23,090 at the end of last week.

But the free market exchange rate surged by VND90 to VND23,555/23,595.

Last Wednesday, the Fed lifted its Fed Funds rate by 50 basis points, to a range of 0.75 percent to 1 percent, the biggest hike in 22 years.

It also confirmed plans to reduce the $8.9 trillion balance sheet, with $47.5 billion in sales starting on June 1 - twice as fast as the Fed's prior balance sheet run-off in 2017.

 
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