Having dropped from over VND25,400 to nearly VND24,500 per dollar in September this year, the U.S. dollar unexpectedly rebounded. Is this a sign of reversal, or a temporary reaction? External pressure on the exchange rate eases Given a slow global economic recovery, widespread international geopolitical tensions, and growing uncertainties, central banks worldwide have tightened their monetary policies, causing capital flows to return to developed nations. In Vietnam, the total net foreign currency deficit in the first half of 2024 exceeded US$7.4 billion, mainly due to foreign direct investment (FDI) enterprises ramping up repatriation of profits abroad. At the same time, businesses and individuals reduced foreign borrowings and focused on debt repayment to avoid the pressure from foreign exchange rates. During this period, the dollar increased by more than 5% against the Vietnam dong currency, reaching its peak around June 2024, which forced the State Bank of Vietnam (SBV) to intervene with measures such as controlling money supply, adjusting interest rates, and eventually selling foreign currency directly into the market. The liquidity squeeze in the market persisted until mid-September 2024 and only eased when the U.S. Federal Reserve (Fed) made the first sharp rate cut since the Covid-19 pandemic in early […]
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