![]() The dollar hits new highs against the dong ![]() Although, the economic slowdown in South Korea could limit tourism, according to analysis by Japan-based MUFG Bank. The services deficit could narrow in the second half of the year on a rise in tourism revenue and China’s zero-Covid policy. That was up from 1.1% in the whole of last year – the largest deficit since 2010. The rise benefited from favourable comparisons with 2021 when strict Covid-19 lockdowns disrupted the economy.Īnalysts expect Vietnam’s real GDP growth to slow heading into 2023 as retail sales continue to rise, but remain below pre-pandemic levels and the US and Europe, which account for around 40% of the country’s exports.Ī widening current account deficit has weighed on the value of the dong, reaching 3.6% of GDP in the first half of 2022. Growth was led by the services and industrial sectors. Vietnam’s real gross domestic product ( GDP) growth accelerated in the third quarter, climbing by a record 13.67% year on year, up from 7.83% in the second quarter. Higher interest rates tend to strengthen the relative value of a currency as they attract capital from foreign investors looking for the best returns on their money. The dollar has soared in value this year as the Fed has hiked interest rates by increasingly large amounts in an attempt to control high inflation. The US dollar is the global reserve currency, viewed by investors as a safe haven to protect their wealth during times of macroeconomic or geopolitical uncertainty. The value of the Vietnamese dong, like any currency, is influenced by the country’s economic growth, trade balance, foreign currency reserves and monetary policy on inflation. The bank has devalued the currency five times since 2014, in a bid to boost exports and control high inflation by ensuring currency stability. ![]() The SBV sets the reference rate for the value of the dong against the US dollar. The USD is the base currency and the VND is the quote currency. The USD/VND pair refers to how many Vietnamese dong one US dollar can buy. In forex ( FX) trading, currencies are traded in pairs, which express how much they are worth in relation to each other. In this article we look at the drivers for the recent performance of the USD/VND pair and the latest forecasts from foreign exchange (forex) analysts. What is the outlook for the USD/VND exchange rate in the current environment? Will the USD continue to set new highs? But with more US Federal Reserve ( Fed) hikes to come, the dollar is likely to remain at its highest levels against other currencies in decades, including the dong. The State Bank of Vietnam (SBV) has raised interest rates to reduce the differential with rapidly rising US rates. The Vietnamese dong ( VND) fell to a record low against the US dollar ( USD) last week and remains under pressure in the face of persistent dollar strength. The USD/VND pair refers to how many Vietnamese dong one US dollar can buy Photo: Dave Primov / Shutterstock
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