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The free exchange rate “evaporated” after the historic US decision, adding more “hot” forecasts

As Dan Viet reported, the US Federal Reserve (Fed) raised interest rates by 0.5% to cope with record inflation in this country. This is the biggest rate hike in 22 years.

Free rate “evaporates” after the decision of the Fed

After the Fed’s decision, the USD/VND exchange rate remained relatively stable, even tended to decrease at banks and even on the “black market”.

Specifically, at Vietcombank, the buying/selling rate was adjusted down by 20 dong/USD, closing the session at 22,800 dong (buying in) and 23,110 dong (selling out).

Similarly, the buying and selling prices of USD at VietinBank were also adjusted down, but the decrease was slightly lower at 10 dong/USD.

Eximbank also reduced the buying price in USD to 22,840 VND/USD (down 20 VND compared to session 4/5) and selling at 23,040 VND/USD (sold out).

Black market rate

The volatility of USD buying/selling prices after the Fed’s decision.

By the last trading session of the week of May 6, the USD/VND exchange rate at commercial banks was relatively stable. For example, Vietcombank or VietinBank, these banks all keep the list price of USD for buying and selling at the same price as the closing price on 5/5.

At Techcombank, the buying and selling prices decreased by only 1 dong/USD after dropping 7 dong in the previous session.

However, if counted in 2 trading sessions after the Fed’s interest rate increase, the USD/VND exchange rate at these banks all decreased by 5-20 VND/USD.

Similarly, the exchange rate on the free market on May 5 also decreased by 25 dong on the buying side and 85 dong on the selling side, trading at 23,555 VND/USD and 23,595 VND/USD.

In the trading session on May 6, the free exchange rate suddenly reversed to increase by 15 dong/USD (buy in) and increased by 45 dong/USD sold out. Thus, in these 2 sessions, the black market USD price of buying/selling “evaporated” 10 dong and 40 dong/USD.

Black market rate

The exchange rate has not been affected strongly after the decision of the Fed. (Photo: TB)

More exchange rate forecasts

According to experts, the Fed’s interest rate decision has not yet affected the USD/VND exchange rate because a 0.5% increase in the Fed’s interest rate has been predicted by the market and their reduction in size. Asset balance is not a new thing. The surprise only happened when the agency raised the increase from 0.5% to 0.75% but this did not happen.

It is also because it is not surprising that the Fed’s decisions have partly reflected on the market and have been “resolved”.

In fact, the pressure on the foreign exchange market has appeared in the past 3 weeks and the State Bank has had to use the tool to sell 3-month USD contract term to support USD liquidity for the market – the first time. for the first time since mid-2018.

However, the supporting factor for VND in this period continued from the positive supply of USD (the trade balance was estimated to have a trade surplus of 2.5 billion USD in the first 4 months and disbursed FDI reached 5.9 billion USD). .

According to BVSC’s calculations, after the statements of some Fed members about the Fed’s drastic increase in interest rates, along with the start of quantitative tightening in the context of US inflation continuing to climb, – this has caused the USD to have a strong increase again, and at the same time make other currencies depreciate.

As of the end of April, VND decreased by 0.53% compared to the end of last month. Compared to the end of 2021, the VND also decreased by 0.57%.

However, with a stable macro economy and large foreign exchange reserves, BVSC assesses that the exchange rate fluctuations in Vietnam in 2022 will not be too large, fluctuating around +/-2% in the year. now.

Dr. Can Van Luc and a research team at BIDV training school said that the Fed still has a few interest rate hikes in the near future. Therefore, USD will continue to appreciate against most other currencies, including VND, causing pressure on USD/VND exchange rate to gradually increase.

“After calculating based on existing advantages and pressure from the Fed’s decision, we forecast the USD/VND exchange rate will increase but not too much. The increase will be about 0.8-1.2% in 2022. “, said Mr. Luc.

In order to minimize the negative effects of the central banks of other countries, especially the Fed, tend to tighten monetary policy and raise interest rates, Mr. Luc recommended. The State Bank needs to continue to operate monetary policy proactively and flexibly with scenarios when there is a stronger monetary policy change of major central banks in the world. We need to coordinate well with fiscal policy, ensure the stability of interest rates and exchange rates, and contribute to curbing inflation according to the target.

In parallel, it is closely following, analyzing and forecasting developments in the international monetary and financial markets. Vietnam needs to develop a scenario if the Fed raises interest rates quickly, the global economy recovers and weakens, leading to fluctuations in the global financial market. The State Bank of Vietnam continues to take appropriate measures to healthyize the financial market, strengthening investors’ confidence.

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