Bank

Shinhan Bank: Despite Pressure, VND Poised for Recovery Through Prudent Management

Shinhan Bank Vietnam's latest report suggests that while the Vietnamese Dong (VND) faces inevitable depreciation pressures amid heightened global uncertainty, Vietnam retains room to maneuver and stabilize its exchange rate. Favorable external factors expected later in the year could pave the way for VND adjustments and recovery.

Administrator

24 December, 2025

Vietnam’s 2026 Growth Slows but Remains Among the Region’s Highest

In the report “Vietnam Economic and Forex Market Outlook – First Half of 2026” published by Shinhan Bank Vietnam’s Global Trading Center, major international organizations forecast that Vietnam’s economic growth in 2026 may slow compared to 2025, yet it will remain significantly higher than many regional economies.

According to Shinhan Bank, the primary growth pressures stem from external factors such as rising tariffs, trade restrictions, and a global economic slowdown. Amid these challenges, domestic private consumption and public investment are expected to remain key pillars, sustaining the economy’s growth momentum.

Among international organizations, the International Monetary Fund (IMF) offers a more cautious forecast, reflecting concerns over U.S.-China trade tensions and increasingly stringent U.S. tariff policies.

State Bank of Vietnam Prioritizes Exchange Rate Stability and Inflation Control

Assessing the 2026 outlook, Shinhan Bank anticipates that the State Bank of Vietnam (SBV) will continue to limit sharp exchange rate fluctuations, prioritizing macroeconomic stability and inflation control.

Since President Donald Trump’s second term, the SBV has maintained a cautious stance, vigilant against the risk of significant VND devaluation, amid concerns that Vietnam could be re-listed by the U.S. as a currency manipulator.

Previously, during Trump’s first term in December 2020, Vietnam was labeled a currency manipulator due to its large trade surplus with the U.S. and forex market interventions.

Following President Trump’s announcement of a 46% tariff on Vietnamese imports on “Liberation Day,” both sides negotiated, reducing the tariff to 20% by July.

Shinhan Bank highlights that the U.S.’s protectionist policies and national interest priorities significantly disadvantage the VND, given Vietnam’s highly open economy and export reliance, particularly on the U.S. market.

Narrowing Monetary Policy Room, Fiscal Policy Expected to Lead

While VND weakness is a rational response to external shocks, Shinhan Bank notes the rapid depreciation increases the likelihood of adjustments and recovery as external factors stabilize toward year-end.

With interest rates nearing historic lows, monetary policy room is limited. Vietnam is likely to enhance fiscal policy, particularly public investment, to support 2026 economic growth.

The report underscores that the banking system’s non-performing loan (NPL) ratio, at around 5%, necessitates urgent bad debt resolution, capital increases, and financial safety consolidation.

Long-term, Shinhan Bank expects Vietnam to sustain reform momentum, including institutional improvements, private sector empowerment, and high-tech sector development in digital economy, AI, and semiconductors. These factors are crucial for managing VND depreciation and maintaining macroeconomic stability.