Dollar Weakens Against Dong on Black Market as US Rate Hike Bets Cool

Unofficial exchange points in Vietnam saw the U.S. dollar weaken against the Vietnamese dong, trading 0.34% lower at VND26,560. This development follows a global trend where the dollar weakened after a tepid U.S. jobs report cooled market expectations for a near-term Federal Reserve interest rate hike. Globally, the dollar's weakness lifted the euro to $1.1440, after it hit a nearly two-week high the day before. It was up 0.5% on the week. The pound firmed to $1.3352 for a 1.1% weekly gain, its best in nearly three months. The stronger dollar also offered respite for the Japanese yen, which strengthened to less than 161 per dollar, but markets remained nervous about intervention risks after a sudden jump on Thursday ⁠lifted the currency from a 40-year low of 162.84. It was last at 161.25. The dollar fell after U.S. job growth slowed sharply in June and payroll gains for the prior two months were revised lower, prompting traders to trim bets on a near-term Fed rate rise. In contrast, Vietcombank, a major Vietnamese bank, kept its exchange rate unchanged at VND26,463. The weakening of the dollar in the black market could potentially affect import costs and inflationary pressures within Vietnam, prompting close observation of future official exchange rate movements. Vietnam's economy, under a one-party system, has actively attracted foreign investment and achieved remarkable growth in recent years. However, fluctuations in global financial markets are a constant risk factor for Vietnam's export-import dependent economy. In particular, given Vietnam's strong economic ties with China, the direction of U.S. monetary policy can indirectly impact Vietnam's trade balance and capital flows.