The recent appreciation of the Vietnam dong currency against the U.S. dollar will give the State Bank of Vietnam (SBV) more room to adjust local-currency interest rates to fuel credit growth and stimulates the economy. However, there are still many challenges for monetary policy in the final months of 2024. Lower pressure on monetary policy management The foreign exchange rate has been volatile since the beginning of 2024. The U.S. dollar edged up from VND24,345 per dollar early this year to VND25,450 in April, or a 4.5% increase. It then remained steadily high until July before a sharp decline in August. The main reason is the cooling of the DXY index after a series of bleak monthly job reports and the gradual easing of inflation in the U.S. Lower consumer demand has led to clearer expectations that the U.S. Federal Reserve (Fed) would lower interest rates. The interbank exchange rate in Vietnam has dropped below VND25,000 per dollar for the first time since early April this year. What needs to be assessed about monetary policy in late 2024 is whether the dollar decline against the dong could stay steady over a sufficiently long period. If this is the case, combined […]