The U.S. dollar has been strengthening against the Vietnam dong both on the official and unofficial markets after the U.S. presidential election result was announced on November 9.
The State Bank of Vietnam fixed the mid-point USD/VND exchange rate at 22,086 on Tuesday, up 19 dong from a day earlier. This is the highest rate since the new fixing mechanism was launched in January this year.
Banks can quote the greenback at -3%/+3% on either side of the reference rate, or between 21,423 and 22,749.
Major banks in Vietnam on Tuesday revised up their offering prices, with Vietcombank
raising the U.S. dollar prices by 20 dong, both for buying and selling.
The U.S. Dollar Index, which tracks the greenback’s performance against six other currencies, climbed 1% to 100 late Monday in New York, its strongest level since Dec. 2, 2015, according to FactSet data.
The index was on track for its sixth consecutive advance, its longest win streak since a six-session run in early May, as investors bet that U.S. President-elect Donald Trump would favor fiscal stimulus, resulting in higher inflation, and the Fed would likely hike interest rates next month.
The USD/VND is slated to go up toward the year-end as firms need more foreign currencies to pay their import bills.
Vietnam reported a trade deficit of $444 million in October, the first gap after successive surpluses in the previous three months, according to customs data.
However, the forex
rate is forecast to remain steady in the final months of this year, according to VnEconomy, because the country posted a trade surplus of $3.25 billion between January and October, versus a trade gap of $3.64 billion in the same period last year.
In addition, the new fixing mechanism, based to an eight-currency basket and macro conditions, has dampened speculation in the forex market. The central bank can also intervene in the market through futures contracts with local commercial banks.
The Vietnamese central bank is now sitting on forex reserves of more than $40 billion, a record high in years.