USD/VND Drops 0.8% from Peak, Banks Cut Rates Despite SBV Hike

Overview

The USD/VND exchange rate at Vietnamese commercial banks has dropped nearly 0.8% from its peak in late July, falling below the start-of-year level. Despite the State Bank of Vietnam (SBV) raising the reference rate by 28 VND to 25,491 VND/USD on August 10, banks like BIDV (HOSE: BID) and ACB (HOSE: ACB) continue to lower their USD quotes, signaling reduced forex pressure.

Key Facts

• SBV raised the central reference rate by 28 VND to 25,491 VND/USD on August 10, with a 5% trading band (24,216–26,765 VND).
• Vietcombank quoted USD at 25,940–26,350 VND, down 90 VND on both sides from the previous week (-0.35%).
• BIDV listed USD at 25,970–26,350 VND; Techcombank at 25,966–26,363 VND.
• Bank USD rates have fallen about 200 VND (nearly 0.8%) from the peak of 26,500–26,530 VND in late July.
• Black-market USD traded at 25,950–26,150 VND in HCMC and 26,170–26,250 VND in Hanoi, with selling prices 100–200 VND below bank rates.
• Vietnam recorded a trade deficit of nearly USD 20 billion in H1, yet the interbank rate remained stable, with the dong occasionally stronger.
• ACB’s head of financial markets, 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 VND to 25,491 VND/USD, but commercial banks continued to lower their USD quotes, extending a two-week decline. Vietcombank, BIDV, and Techcombank all reduced their rates by around 90 VND compared to the previous week, bringing the bank USD price to roughly 25,940–26,363 VND. This represents a drop of about 200 VND (0.8%) from the late-July peak of 26,500–26,530 VND, pushing the exchange rate below the start-of-year level.

The black-market USD also declined, trading at 25,950–26,150 VND in HCMC and 26,170–26,250 VND in Hanoi, with selling prices 100–200 VND lower than bank rates. Experts attribute the sharp fall to tighter enforcement at gold shops (reducing both supply and demand), attractive VND deposit rates of 8.5–9% per annum, and a narrowing gold price gap that curbs demand for USD to smuggle gold.

Huỳnh Duy Sang, Director of Financial Markets at ACB, told VnExpress that the USD/VND rate has been more stable than expected this year. Despite a nearly USD 20 billion trade deficit in H1, the interbank rate remained flat, supported by FDI disbursement and foreign loans. He expects trade balance to improve in Q3 and Q4 as exports recover, but notes dependence on oil prices and Fed rate decisions.

Market Context

BIDV (HOSE: BID) closed at 39,500 VND on August 10, while ACB (HOSE: ACB) closed at 22,650 VND. The banking sector has been under watch for forex-related risks, but the recent dong strength reduces pressure on banks’ balance sheets and importers. The SBV’s reference rate hike is modest, and the market’s downward trend suggests ample USD supply. This stability supports the sector’s outlook, especially for banks with significant foreign-currency exposure.

Strategic Significance

The sustained decline in USD/VND, despite a large trade deficit, indicates robust capital inflows and effective central bank management. For banks like BIDV and ACB, a stable dong reduces currency risk for their corporate clients and supports credit growth. The narrowing gap between official and black-market rates also signals improved market confidence. If the trend continues, it could ease inflationary pressures and give the SBV more room to maintain accommodative monetary policy, benefiting the banking sector’s net interest margins.

What to Watch

• Q3 trade balance data: A narrowing deficit would confirm easing pressure on the dong.
• Fed interest rate decisions: Any hawkish surprise could reverse the trend.
• Oil price movements: Higher oil prices could increase import costs and pressure the dong.
• SBV’s next reference rate adjustments: Further hikes would signal persistent pressure.
• Black-market premium: A sustained discount to bank rates indicates ample USD supply.