Vietnam Central Bank Sets Record High Reference Rate Amid Dong Pressure

The State Bank of Vietnam (SBV) on Monday raised its reference exchange rate for the US dollar against the Vietnamese dong (USD/VND) to a record high of VND 25,306 per dollar. This marks the third consecutive session the SBV has increased the reference rate, surpassing the previous peak of VND 25,298 set in late August last year. The move aligns with the strengthening of the US dollar, as the DXY index, a measure of the dollar's strength, has climbed to a one-year high, up 0.2% from the previous weekend. The SBV's decision to set a record-high reference rate signals persistent pressure on the dong and provides greater room for fluctuations in commercial banks' exchange rates. The reference rate, updated daily by the SBV, is calculated based on interbank market movements, the currency baskets of major trading partners, macroeconomic balances, and policy objectives. It serves as a reference for commercial banks to adjust their actual transaction prices within a 5% band. Under this regulation, banks are permitted to buy and sell USD within the range of VND 24,040 to VND 26,571 today. Following the SBV's signal, several banks increased their exchange rates by tens to hundreds of dong, although they remain around VND 30 lower than the previous record high. Banks such as Vietcombank, MB, Eximbank, and Sacombank are trading around VND 26,140-VND 26,540. VietinBank made the most significant adjustment, raising its buying price for the US dollar by VND 188 compared to the previous day to VND 26,153. Its selling price also increased by nearly VND 30 to VND 26,533. On the free market, some foreign exchange points in Ho Chi Minh City have not changed their prices this morning, still trading around VND 26,400-VND 26,420. Forecasts from several international banks and analytical groups suggest that the exchange rate will fluctuate around VND 26,500 this quarter and is likely to gradually cool down thereafter. "In the medium term, we maintain our view that the dong will remain relatively stable due to positive underlying fundamentals and the SBV's continued management of the exchange rate within the permitted trading band," commented an expert from United Overseas Bank (UOB). At a press conference earlier this month, SBV Deputy Governor Pham Thanh Ha stated that the exchange rate and foreign exchange market have recently faced pressure from complex and unpredictable international market developments, as well as domestic challenges. The SBV's stance is to manage the exchange rate flexibly to absorb external shocks and to combine various monetary policy tools to stabilize the foreign exchange market, the macroeconomy, and control inflation.