On 22 September, the SBV also raised interest rates for the first time in 11 years, increasing the refinancing, overnight lending and SBV loan rates by 100 basis points to return them to March 2020 levels. The SBV has been selling large amounts of US dollars from its foreign exchange reserves and has withdrawn trillions of dong through open market operations to maintain banking system liquidity and indirectly increase interbank interest rates.įollowing the SBV’s net withdrawal, the overnight interbank interest rate rose by 40 basis points ( bps) to 4.9% last week. But the dollar’s rally in 2022 lifted the pair to a record high in September, reaching 23,513 on the last day of the month. The USD/VND exchange rate then declined to 23,080 at the end of 2020 and reached 22,645 by November 2021. Past performance is not a reliable indicator of future results The value of the Vietnamese dong against the US dollar gradually declined from the 2014 devaluation, when it was trading around 21,000, to around 23,600 in March 2020 as investors sought the safe haven of the USD at the start of the Covid-19 pandemic. Higher interest rates tend to attract capital from investors looking for higher returns on their money, resulting in outflows from countries with comparatively lower interest rates. ![]() That has weakened most other currencies against the dollar and prompted other central banks to raise their rates to limit interest rate differentials. The value of the US dollar has soared in 2022 in response to the Federal Reserve ( Fed) rapidly hiking interest rates in an effort to tame record inflation. The value of the currency is influenced by Vietnam’s trade flows, foreign currency reserves, economic growth, interest rates and inflation, as well as US monetary policy. The dong has been devalued five times since 2014 with the aim of boosting exports and ensuring currency stability to control high inflation. The State Bank of Vietnam sets the reference rate for the value of the dong against the US dollar. The dong was revalued in September 1985 at a rate of 10 old dong to one new dong. The two versions were unified when the country became one in 1978. The Vietnamese dong was introduced in North Vietnam in 1946 to replace the French Indochinese piastre, and became the South Vietnam currency in 1953. What affects the Vietnamese dong’s value? In this article, we look at recent exchange rates trends and some of the latest Vietnamese dong predictions from analysts. What drives the value of the Vietnamese dong, and what is the outlook for the currency's future? The VND/USD exchange rate was at a low of 0.00004190 on 30 September.Ī trade surplus and moves by the State Bank of Vietnam (SBV) have supported the dong against other currencies such as the euro (EUR), which is facing its own pressures stemming from the Russia-Ukraine conflict and an economic slowdown. Like other emerging markets currencies, the Vietnamese dong ( VND) has fallen in value against the US dollar (USD) this year as the dollar has rallied to 20-year highs. NewDay Ltd is authorised and regulated by the Financial Conduct Authority with number 690292 and is also authorised by the Financial Conduct Authority under the Payment Services Regulations 2017 (Ref no: 555318) for the provision of payment services.Will USD strength send VND to fresh lows? – Photo: tanukiphoto / Getty Images Credit is provided by NewDay Ltd, a company registered in England and Wales with registered number 7297722, registered office: 7 Handyside Street, London, N1C 4DA. ![]() Authorised and regulated by the Financial Conduct Authority (FRN 724309). John Lewis Finance is a trading name of John Lewis plc, registered in England with company number 233462, registered office: 171 Victoria Street, London SW1E 5NN. John Lewis plc introduce the panel of carefully chosen providers in Bureau de Change products and services, whom each hold the appropriate licences with the Financial Conduct Authority and HMRC.įoreign Currency online from both John Lewis Finance and John Lewis & Partners is provided by First Rate Exchange Services Limited registration number 04287490 (Money Service Business licence number MLR-64068), whose registered office is at Great West House, Great West Road, Brentford, West London, TW8 9DF England. Registered in England (Registered Company Number 233462). Registered office: 171 Victoria Street, London SW1E 5NN. John Lewis Finance and John Lewis & Partners Bureau de Change are both trading names of John Lewis plc.
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