The VND has depreciated by 1.55% YTD against the USD, yet remained relatively stable compared to other currencies;

Fed’s plan to cut rates in 2024 will alleviate the pressure from the USD, coupled with a more positive USD supply and a narrowing of the USD/VND overnight interest rate;

Increased imports and the widening gold price gap are driving up demand for USD. Rock-bottom deposit rates are are prompting a shift away from traditional savings and towards alternative investment vehicles such as USD. Higher USD demand has led to VND depreciation;

The State Bank of Vietnam (SBV) has been net withdrawing T-bills from the open market since the beginning of the week of March 11, 2024, aiming to reduce short-term excess liquidity in the system and support the exchange rate;

Exchange rate forecast: With more positive factors than prior years, we anticipate the present volatility in the USD/VND exchange rate is short-term. It is forecasted that the VND will maintain a fluctuation range of ±2-3% throughout this year.