The USD-Index on February 27, despite falling to 103.67 points, dropping 1.01 points compared to the recent peak of 104.8 points (February 13), has still increased compared to 102.5 points at the beginning of 2024 (January 4).
|
USD-Index from the beginning of 2023 until now
Source: Tradingview
|
Domestically, the central exchange rate recorded an increase to 24,014 VND/USD on February 27 after dropping below this level in the last session of January.
| The central exchange rate from the beginning of 2024 until now |
At commercial banks, on the morning of February 27, Vietcombank listed the selling price of USD at 24,830 VND/USD; the cash buying price – transfer buying price is respectively 24,460 VND/USD – 24,490 VND/USD.
Eximbank listed the selling price of USD at 24,830 VND/USD; the cash buying price – transfer buying price is respectively 24,440 VND/USD – 24,520 VND/USD.
The exchange rate will cool down in the second half of 2024
PhD. Nguyen Tri Hieu – Financial and Banking Expert believes that the high exchange rate after the Lunar New Year is not surprising and is supported by many factors.
PhD. Nguyen Tri Hieu
|
Firstly, import-export is the first cause affecting the exchange rate. If there is a high import, the demand for buying foreign currency to pay for imports increases, and the exchange rate increases accordingly.
According to the report of the General Statistics Office, the import situation in January 2024 increased, which also increased the demand for foreign currency, thus pushing up the exchange rate.
Secondly, speculation also contributes to the increase in the exchange rate. When speculators see that the exchange rate tends to increase, they will find ways to buy foreign currency. Especially in the free market, this is a permanent factor.
Thirdly, the Federal Reserve Bank of the United States has not indicated when it will reduce interest rates, thereby increasing the value of the US dollar. Currently, the USD-Index stands at 103.97 points (February 26, 2024), still at a high level, increasing the value of the US dollar, thus pushing up the exchange rate.
If the exchange rate increases by 3% throughout the year, it is an acceptable level, while above 3% investors need to pay attention. When the exchange rate increases, the value of investments and profits that can be withdrawn will decrease. Because when the value of investments is converted into US dollars, it will receive less.
PhD. Nguyen Tri Hieu believes that the exchange rate will continue to fluctuate, and if it increases, it will rise by about 3%. In the second half of 2024, the exchange rate may stabilize or decrease. This is because if the Federal Reserve Bank of the United States lowers interest rates, the value of the US dollar will decrease, thereby pulling down the exchange rate. Therefore, in the second half of 2024, the exchange rate may cool down and be balanced with the sharp increase in the exchange rate at present.
The exchange rate will remain stable in the first half of 2024
PhD. Dinh Trong Thinh – Economic Expert believes that of course, when the exchange rate increases sharply, it will put pressure on Vietnam’s import-export activities and the stability of the VND. Therefore, maintaining exchange rate stability has extremely significant meaning in stabilizing the macroeconomic situation and from there contributing to creating favorable conditions for import-export activities, as well as attracting foreign investment into Vietnam in the coming time.
PhD. Dinh Trong Thinh
|
The exchange rate in recent days has experienced sudden increases, and this is also a temporary state. After the Lunar New Year, the demand for import-export activities and travel between Vietnam and other countries also increases. Therefore, some factors stimulate the buying and selling of US dollars and increase the demand for foreign currency.
One reason is the amount of remittances flowing into Vietnam at the end of the year and beginning of the year is no longer abundant. The amount of remittances at the end of the year was abundant, and the exchange rate was stable. Coming to the beginning of the year, the amount of remittances is not as much, hence affecting the exchange rate somewhat.
Secondly, the US dollar is recovering. Previously, with the expectation that the Fed would reduce interest rates, the US dollar weakened and the price of gold increased. Just before the Lunar New Year, the price of gold reached the highest level ever, but because inflation is still high, the Fed sent a message that it will not reduce interest rates until at least June this year. This information will also affect and cause the world gold price to tend to decrease, the US dollar will continue to strengthen, putting pressure on the exchange rate.
Furthermore, the increase in import demand at the beginning of the year also affects the exchange rate. However, this is only a seasonal factor. Usually, the exchange rate will increase at the beginning of the year and from August – September and the end of the calendar year. These are the times when it is necessary to import goods and increase the demand for foreign currency. Therefore, it only fluctuates in the short term.
Another reason is the exchange rate speculation of commercial banks. In the interbank market, the interest rate on the US dollar is still higher than the VND interest rate, which also puts pressure on the exchange rate.
The current exchange rate situation will not have a significant effect on investor sentiment, but if the exchange rate rises high, it will pressure the hoarding of foreign currency sentiment.
