The strengthening of the U.S. dollar against the Vietnamese dong over the past weeks is considered temporal and fluctuations will likely diminish, said the National Financial Supervisory Commission (NFSC), the government’s financial watchdog.
According to an NFSC report sent to the regular cabinet meeting, the mid-point USD/VND
rate set by the State Bank of Vietnam
reached 22,136 on November 23, rising 1.1% against the start of the year. The rate hovered around 22,700 dong per USD at commercial banks, up 0.22%
The price of the U.S. dollar at gold shops shot up to a new record high of 23,300 dong in recent days.
The USD/VND rate owes its weakening to the continuous appreciation of the greenback against major currencies, especially after the outcome of the U.S. presidential election, the commission said.
Due to its seasonal character, demand for forex bounces back as firms need to repay bills by the year-end and the Fed
is speculated to raise interest rates in December.
In addition, credit in foreign currency grew 4.4% as of October 30 from end-2015, compared to a 9% decline in the same period last year.
“Volatility of the forex rate in November is just temporal” because the country expects a trade surplus for the whole 2016, according to NFSC.
The commission noted upward pressure on the USD/VND will come from (i) high possibility of the Fed hiking rates, (ii) the depreciation of some currencies, particularly the Chinese yuan, in the basket used for fixing the USD/VND rate, and (iii) inflation on the rise.
Sharing the same view, financial expert Can Van Luc told BizLIVE that the weakening of the dong against the U.S. dollar recently is mainly due to psychological factors.
“It’s undeniable that the USD/VND rate will undergo much pressure from now to the year-end. However, given the stable supply-demand in the market, I believe the rate will be under control,” Luc added.