HCMC – The Vietnam dong currency is still under pressure, according to the World Bank’s (WB) latest macroeconomic update for May 2024.
The exchange rate between the Vietnam dong and the U.S. dollar had increased by 8% year-on-year as of the end of May 2024. Interbank interest rates rose slightly to 4.3% in May from 4% in April, reflecting the State Bank of Vietnam’s tighter liquidity policy.
Budget revenues improved while public spending slowed. May’s budget revenues reached VND898.4 trillion, up by 14.8% over the same period last year.
However, public expenditure was around VND656.7 trillion in the first five months of 2024, only 0.5 percentage points higher than in the same period in 2023. Public investment disbursement was estimated at VND148.3 trillion, rising by 5% year-on-year.
To support consumption, the Government proposed extending the VAT reduction until the end of 2024, instead of the initial deadline of June. Additionally, the State Bank of Vietnam issued a directive on May 30, 2024, urging banks to lower lending rates by one to two percentage points to stimulate domestic private investment.
The WB noted signs of recovery in international demand but highlighted that domestic demand, particularly consumption, remains uncertain.
It recommended that while measures have been taken to support the domestic economy, reducing interest rates amid a strong U.S. dollar could increase exchange rate pressures. Therefore, it suggested continued support for aggregate demand through investment spending.
