USD Free Market Rate Falls Below 26,000 VND, Lowest in Over a Year

Overview

The free-market USD/VND exchange rate has fallen below 26,000 VND, reaching its lowest level in over a year, while the central bank’s reference rate rose by 25 VND to 25,516 VND. This divergence highlights the impact of tighter gold and forex controls and attractive VND deposit rates on the unofficial market. For BIDV (BID), the largest listed bank on HOSE, the trend signals reduced pressure on official exchange rates and potentially more stable funding conditions.

Key Facts

• Free-market USD buying rate at 25,700 VND, selling at 25,900 VND on August 11, down 200 VND from the previous day.
• Free-market rate is the lowest since April 2025, down about 7% from the peak of over 28,000 VND earlier this year.
• The gap between free-market and bank rates has narrowed to 200-400 VND, compared to nearly 1,800 VND in late March.
• The central bank’s reference rate increased by 25 VND to 25,516 VND, up about 1.6% since the start of the year.
• Banks like Vietcombank, VietinBank, and BIDV are trading USD at 25,940-26,320 VND, well below the allowed ceiling of 26,792 VND.
• VND deposit rates remain attractive at 8.5-9% per annum, encouraging conversion from USD to VND.
• BIDV (BID) closed at 39,100 VND on August 11, 2026.

What Happened

On August 11, the free-market USD/VND exchange rate fell below 26,000 VND for the first time in over a year, with many exchange points in Ho Chi Minh City quoting buying rates around 25,700 VND and selling rates around 25,900 VND. This represents a decline of about 7% from the peak of over 28,000 VND earlier in the year. The gap between the unofficial market and official bank rates has narrowed significantly, from nearly 1,800 VND in late March to just 200-400 VND now.

Analysts attribute the decline to several factors: tighter enforcement of gold and forex trading regulations, which has reduced both supply and demand in the informal channel; attractive VND deposit rates of 8.5-9% per annum, which have shifted investor preference from holding USD to VND savings; and a narrowing of the domestic-international gold price gap, which has reduced the need to hoard foreign currency for gold smuggling. VNDirect’s strategy report notes that speculative demand has been largely eliminated as the gold market cools and legal risks rise.

Meanwhile, the central bank’s reference rate rose by 25 VND to 25,516 VND, up about 1.6% from the start of the year. Despite external pressures, the rate is considered relatively stable. Commercial banks are trading USD well below the allowed ceiling of 26,792 VND, with major banks like BIDV quoting around 25,940-26,320 VND.

Market Context

BIDV (BID), listed on HOSE, closed at 39,100 VND on August 11, 2026. The banking sector has been sensitive to exchange rate movements, as a stable VND reduces pressure on foreign currency funding and supports asset quality. The narrowing spread between official and unofficial rates suggests reduced speculative activity, which could lead to more predictable forex conditions for banks. The central bank’s reference rate adjustment, while modest, indicates continued management of exchange rate stability amid global uncertainties.

Strategic Significance

For long-term investors, the sustained decline in the free-market USD rate and the narrowing gap with official rates signal a reduction in systemic forex risk. This is particularly relevant for BIDV, which has significant foreign currency exposure. Tighter controls on gold and forex trading, combined with attractive VND yields, may reduce capital outflows and support the dong’s stability. If the central bank maintains this policy stance, banks could benefit from lower funding costs and reduced currency risk, potentially improving net interest margins. However, any shift in monetary policy, such as easing liquidity to lower interest rates, could reverse the trend and increase pressure on the exchange rate.

What to Watch

• The central bank’s daily reference rate adjustments and any changes to the trading band.
• Policy signals from the State Bank of Vietnam regarding gold and forex management, particularly any new regulations or enforcement actions.
• VND deposit rate trends, as a decline could reduce the attractiveness of holding VND and weaken the dong.
• BIDV’s quarterly earnings reports for any impact of exchange rate movements on its foreign currency operations.
• Global USD strength and Federal Reserve policy, which could influence capital flows into Vietnam.