US dollars were selling for 24,970 Vietnamese dong on the black market this morning, Zing News is reporting, getting closer to last October’s high of 25,280. Official rates are also getting close to their 2023 high with the official exchange rate set by the State Bank of Vietnam (SBV) this morning 23,987. This means that theoretically US dollars could be sold for as much as 25,186. For perspective, the previous highest selling price in the last 12 months was 25,244 set in October of 2023.
Vietnam’s currency is on a managed peg with the SBV setting the exchange rate each day and banks permitted to trade the local currency at rates five percent either side. (For more details see: Banking in Vietnam: Industry Overview 2023)
The publication ties this to a strengthening US dollar noting that the US dollar index (DXY) has increased 1 percent since the start of the year.
Zing also suggests that remittances from abroad may help to alleviate pressure on the local currency in the build up to the Lunar New Year holiday.
That said, it’s worth noting that US$26 billion worth of loans were issued in December by Vietnamese banks, much more than the average of about US$4 billion a month from January to November. It looks a lot like these were probably consumer loans too. This could create inflationary pressure particularly in the lead up to the Lunar New Year when spending is known to jump (See also: Vietnam banks push consumer credit to reach credit growth targets).
It’s also worth noting that last year when exchange rates went this high the SBV issued several billion dollars worth of t-bills to bring to try and bring it back down.