USD/VND Drops 0.8% from Peak: BID, ACB Outlook

Overview

The USD/VND exchange rate at Vietnamese commercial banks has dropped nearly 0.8% from its late-July peak, easing pressure on the dong. On August 10, the State Bank of Vietnam (SBV) raised the reference rate by 28 dong to 25,491 VND/USD, yet bank USD prices continued to decline. This development is significant for major banks like BIDV (BID) and ACB, as it reduces currency risk and supports stable deposit rates.

Key Facts

• SBV raised the central reference rate by 28 dong to 25,491 VND/USD on August 10, with a trading band of ±5% (24,216–26,765 VND).
• Vietcombank quoted USD at 25,940–26,350 VND, down 90 dong on both sides from the previous week.
• BIDV listed USD at 25,970–26,350 VND; Techcombank traded at 25,966–26,363 VND.
• Bank USD rates fell about 200 dong (≈0.8%) from the peak of 26,500–26,530 VND in late July.
• On the free market, USD traded around 25,950–26,150 VND in HCMC and 26,170–26,250 VND in Hanoi, with selling prices 100–200 dong below bank rates.
• Vietnam recorded a trade deficit of nearly $20 billion in H1, yet the interbank rate remained stable.
• ACB’s financial markets director, Huỳnh Duy Sang, forecasts VND depreciation of about 2% for the full year.

What Happened

On August 10, the State Bank of Vietnam raised the central reference rate by 28 dong to 25,491 VND/USD, but commercial banks continued to lower their USD quotes, extending a two-week decline. BIDV, for instance, reduced its rate to 25,970–26,350 VND, while other banks like Vietcombank and Techcombank followed suit. The free market also saw USD prices fall, with some outlets quoting below bank levels.

Analysts attribute the drop to several factors: tighter enforcement on foreign currency exchange at gold shops, attractive VND deposit rates (8.5–9% per annum), and a narrowing gap between domestic and global gold prices, which reduces demand for USD to smuggle gold. Huỳnh Duy Sang of ACB noted that the dong has been more stable than expected, with the interbank rate nearly flat despite a $20 billion trade deficit in H1, thanks to FDI disbursements and foreign loans.

Market Context

BIDV (HOSE: BID) closed at 39,500 VND on August 10, while ACB (HOSE: ACB) closed at 22,650 VND. The easing USD/VND rate reduces pressure on banks’ foreign currency positions and supports stable funding costs. The banking sector, a key component of the VN-Index, benefits from reduced currency volatility, which is positive for investor sentiment. The SBV’s management of the reference rate within a 5% band provides flexibility, but the actual market rate has been trending lower, reflecting improved supply-demand dynamics.

Strategic Significance

For long-term investors, the stabilization of the dong is a positive signal for the banking sector, as it reduces the risk of currency-related losses and supports net interest margins. The decline in USD rates, despite a trade deficit, indicates that capital inflows (FDI, foreign loans) are offsetting external pressures. This resilience may enhance the attractiveness of Vietnamese banks like BID and ACB, which have significant foreign currency operations. However, the outlook depends on global factors such as oil prices and Fed policy, which could reverse the trend.

What to Watch

• Q3 trade balance data to see if export recovery reduces the deficit.
• SBV’s next monetary policy moves, especially any changes to the reference rate.
• Fed interest rate decisions and their impact on USD strength.
• Oil price movements, as they affect import costs and trade balance.
• Any further regulatory actions on gold shops or foreign currency trading that could affect supply-demand dynamics.