The USD/VND exchange rate continues to soar, and Vietnamese companies face import cost pressures

Recently, although the State Bank of Vietnam has issued a notice stating that it is prepared to intervene in the exchange rate market to sell foreign currencies, the US dollar/Vietnamese Dong (USD/VND) exchange rate in banks and the free market is still at a high temperature. This exchange rate pressure directly affects the import costs of many domestic companies.

According to data on the morning of April 23, 2024, the US dollar exchange rate announced by VietinBank was 25,180 - 25,485 VND (buy-sell), and the buying price increased by 20 VND compared with the previous trading day. The exchange rate of BIDV Bank is also shown as 25,185 - 25,485 VND.

At Vietcombank, the dollar exchange rate was 25,145 - 25,485 VND (buy - sell), breaking the previous record of 24,133 - 25,473 VND set on April 19.

This is the sixth time that the banking system has broken through a new exchange rate high, gradually approaching the threshold of 26,000 VND.

On the free market, the US dollar exchange rate has also increased by VND90 and VND110 since last weekend, reaching the buying and selling price of VND25,770-25,870. Currently, the free market dollar price is about 625 VND and 385 VND higher than the bank price. 

From April 15 to 19, the U.S. dollar index in the global market rose by more than 2%, but fell slightly over the weekend, closing at 105.98 points.

Since the beginning of the year, the dollar has gained about 4.76% against a basket of currencies, mainly due to strong growth in the U.S. economy, giving the Federal Reserve more reason to maintain tight monetary policy to control increasingly unmanageable inflation. A stronger dollar weighed on several currencies across Asia, including the Vietnamese dong.

In response to the rapid rise in the USD/VND exchange rate, the State Bank of Vietnam announced on April 19 that it would begin selling U.S. dollars to banks with negative foreign exchange values ​​at a price of 25,450 VND for exchange rate intervention, a move aimed at "cooling" the exchange rate. However, the USD/VND exchange rate in banks and free markets is still climbing as the US dollar continues to strengthen in the international market.

In addition, the turmoil in the global economic and political situation has caused many countries to depreciate their national currencies by ranging from 5% to nearly 9%. Fluctuations in the Vietnamese Dong are considered adaptive to market conditions but require careful monitoring.

Associate Professor of Economics Phan Thị Thu Hà said that usually an increase in the exchange rate will lead to an increase in the cost of imported goods, thus affecting the prices of a variety of goods and services and having an impact on domestic inflation.

Rising exchange rates will also increase travel costs for foreign tourists in Vietnam, affecting competitiveness. In addition, corporate and public debt (external debt) with large amounts of US dollar foreign debt will have to pay larger exchange rate differentials. Ms. Hà pointed out that this puts pressure on enterprises and affects the fiscal balance of payments.

In summary, the sharp increase in the dollar exchange rate has posed serious challenges to many businesses, especially those that rely on imports. Companies are now looking to increase their use of domestic raw materials to reduce import dependence and potential risks. At the same time, all enterprises should also pay attention to the use of financial derivatives and related strategies to prevent exchange rate risks.

For more information about real estate projects in Ho Chi Minh City and neighboring provinces, please contact FTT LAND!

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