The State Bank of Vietnam (SBV) raised the central exchange rate to VND 25,004 per US$1 on June 4, marking the first time it has crossed the 25,000 mark since the bank shifted to a floating peg in 2016, CafeF has reported.
Key details in CafeF’s article include:
- Record-high rate: The central rate increased by 22 VND, with some commercial banks raising their rates to the ceiling of 26,254 VND/USD.
- Bank reactions: Vietcombank and BIDV adjusted their buy-sell prices upward by 20–30 VND, while VietinBank raised its buying price by 179 VND.
- SBV’s balancing act: Speaking at the Vietnam Investment Forum 2025 – Mid-Year Update, OCB CEO Pham Hong Hai noted the SBV is “in an extremely difficult position,” needing to stabilise the exchange rate while also cutting interest rates to support growth.
- Exchange rate risk: Hai warned that excessive VND depreciation could trigger accusations of currency manipulation, making monetary policy especially complex.
- Structural pressure: According to MBS Securities, upward pressure on the exchange rate is driven by SBV’s ongoing USD purchases and increased corporate demand for foreign currency amid global trade uncertainty.
- Forecast: MBS expects the USD/VND exchange rate to range between 25,500–26,000 in 2025, reflecting the impact of US fiscal stimulus, high interest rates, and protectionist trade policies.
Of note, over the past two years, Vietnam has kept the exchange rate artificially low by selling foreign reserves and conducting open market operations. These interventions helped stabilise the dong amid external shocks and capital outflows, but came at the cost of depleting reserves and widening the gap with market fundamentals.
And now, with reserves strained and interest rates already low, the State Bank appears to be allowing the exchange rate to adjust more freely. The central rate crossing 25,000 VND signals a shift toward greater flexibility, likely reflecting limited capacity for continued intervention and rising pressure from global trade and capital dynamics.
See also: Right Now, a Weak Dong Could be Good for Vietnam. Here’s Why.