Vietnam Aims for Stability Within Exchange Rate Band

Vietnam's central bank set the daily trading band for the USD/VND exchange rate at commercial banks at 26,892 VND per USD for the ceiling rate and 24,330 VND per USD for the floor rate on September 8. This maintains the fluctuation band at +/- 5%. With the current trading band of +/- 5%, the ceiling rate applicable for commercial banks during the day is 26,885 VND/USD, and the floor rate 24,325 VND/USD. With the current trading band of +/- 5%, the ceiling rate applicable for commercial banks during the day is 26,896 VND/USD, and the floor rate 24,334 VND/USD. This measure is understood to aim at stabilizing Vietnam's economy and controlling exchange rate risks in international trade. Vietnam has achieved remarkable economic growth in recent years, driven particularly by manufacturing and exports. However, global economic uncertainties and inflationary pressures can affect exchange rate stability. The current setting of the exchange rate band can be seen as part of Vietnam's economic policy response to these external factors. Under its one-party system, the Vietnamese government strives to balance economic growth with social stability, and exchange rate stability is a crucial element in attracting foreign investment and maintaining export competitiveness. Particularly for Vietnam, with its strong economic ties to China, the stability of the dong against the yuan contributes to maintaining supply chains. Vietnam's exports are diverse, including agricultural products (rice, cashews, coffee, etc.), electronics, and textiles. A stable exchange rate is essential for these products to remain competitive in international markets. Foreign direct investment (FDI) is also a vital pillar of the Vietnamese economy, and exchange rate stability enhances predictability for investors. Vietnam has also been focusing on infrastructure development and digital transformation in recent years, which hold the potential to further accelerate economic growth. However, to promote investment in these areas, macroeconomic stability, especially exchange rate stability, is required. Source: VietnamPlus English