The US dollar is predicted to surge in the latter half of 2025 as Trump’s second-term trade policies and fiscal measures are clarified and implemented. Prolonged inflation, coupled with structural factors such as economic efficiency, will impact the foreign exchange market, with exchange rate differentials serving as the primary driver. Over the long term, the sustainability of macroeconomic stimulus measures will influence the dollar’s strength. Domestic and foreign investors may turn to inflation-hedging assets if instability persists.
The dollar may experience a period of weakness in early 2025 due to continued Fed interest rate cuts and policy implementation uncertainty. The lingering effects of interest rate hikes and a strong dollar since October 2024 could further pressure the currency. The Fed’s recent rate cuts are expected to support Asian currencies, including the Vietnamese dong. However, better-than-expected US economic data has increased pressure on Asian foreign exchange markets. Factors such as trade policy uncertainty and potentially inflationary measures under the Trump administration could undermine the stability of monetary policy in the region.
According to Standard Chartered’s economic expert, Vietnam continues to achieve robust growth. Exports rose 14.9% year-over-year in the first ten months of 2024, while imports increased 16.8%; the electronics import-export sector is on a path to recovery. Solid manufacturing growth and appropriate monetary policies have contributed to the economy’s rebound since the beginning of the year. Foreign investment continues to rise, as evidenced by strong FDI inflows. Disbursed FDI increased by 8.8% year-over-year, while committed FDI rose by 1.9%. The manufacturing sector accounted for 62.6% of total committed FDI during this period, while the real estate sector attracted 19%, an increase compared to the previous year.
Tim Leelahaphan, Thailand and Vietnam Economist, Standard Chartered Bank
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Tim Leelahaphan, Thailand and Vietnam Economist at Standard Chartered Bank, commented: “We anticipate that the State Bank of Vietnam (SBV) will raise interest rates by 50 basis points in Q2 2025. The government’s strong economic growth expectations are supporting the current low-interest-rate environment. Inflation may pick up again starting in Q2 2025; hence, we expect interest rates to normalize in Q2. The Fed’s actions will also be a crucial factor influencing the SBV’s monetary policy decisions. Lower US interest rates could help reduce outward capital flows, while a sustainable trade surplus and robust foreign currency earnings from tourism will support the VND. However, low import coverage remains a challenge.”
Standard Chartered forecasts that the Fed’s rate cuts could lead to a weakening trend for the dollar over the next few quarters, resulting in a USD/VND exchange rate of 25,250 by the end of 2024 and 25,450 in Q2 2025.
Han Dong
The Greenback Recovers Gracefully
After a sharp decline, the US dollar rebounded slightly in the international market last week (December 2-6, 2024), as robust US jobs data indicated a strong recovery in the labor market.
The Greenback Inches Up, Yuan Continues to Slip
On the morning of December 4th, the exchange rate between the Vietnamese Dong and the US Dollar experienced a slight uptick, while the rate against the Chinese Yuan continued its downward trend.
The Greenback and the Yuan: A Tale of Two Currencies’ Decline
At Vietcombank, one of the leading commercial banks in Vietnam, the USD exchange rate stands at 23,157-23,460 VND/USD (buying-selling), a decrease of 7 VND from the morning of December 6th. Meanwhile, the Chinese Yuan also witnessed a drop of 5 VND.
The Rising Interest Rates on Deposits: A Year-End Phenomenon
In early December, commercial banks continued to raise deposit interest rates to meet the surge in capital demand during the year-end period.
“Unleashing Economic Growth: A 12.5% Surge in Credit Across the Nation as of December 13th.”
The information was released by the State Bank of Vietnam (SBV) at a conference on December 14, 2024, reviewing the monetary policy control and banking activities in 2024 and outlining tasks for 2025.
