The Euro (EUR) has recently gained strength against the Vietnamese Đồng (VND), reaching near 30-day highs around 30,674 VND. This level is close to the three-month average for the EUR/VND exchange rate, reflecting a stable trading range of 3.6% between 30,210 and 31,309. Analysts note that the euro's appreciation is primarily linked to a weaker US dollar (USD), which has enhanced the purchasing power of the EUR. Furthermore, improvements in investor confidence regarding the Eurozone’s economic recovery have added support to the single currency.
The European Central Bank's (ECB) recent dovish shift in monetary policy has also contributed to the euro's performance. While the ECB raised interest rates to 4.0% in 2024, expectations are building for potential cuts as economic growth slows, with forecasts suggesting a reduction to 3.5% by late 2025. These changes may diminish the interest rate differential compared to the Federal Reserve, impacting the euro’s attractiveness.
Geopolitical factors, particularly the ongoing war in Ukraine, have significant implications for the euro's stability and fluctuations. The war has influenced energy prices and trade dynamics within the Eurozone, presenting both challenges and opportunities for the currency. If resolutions emerge, investor confidence can rebound, supporting the euro's value in global markets.
In contrast, the VND faces depreciation pressures, expected to decline by approximately 3% against the USD in 2025. Central Bank interventions have aimed to stabilize the currency amid external challenges, including trade tensions and tariffs imposed by the US. Economic strategies targeting a 10% GDP growth in 2026, despite ongoing pressures, indicate Vietnam's commitment to maintain robustness in its economic policy.
Additionally, oil prices, currently trading at $62.45 per barrel, are 3.6% below their three-month average. Fluctuating oil prices indirectly affect both the EUR and VND due to their influence on inflation and trade balances. A significant rise in oil prices typically benefits the VND, given Vietnam's oil export status, while a decline could exacerbate existing challenges.
Overall, the interplay between the ECB's monetary policy, geopolitical realities in Europe, and economic developments in Vietnam creates a complex environment for the EUR/VND exchange rate. Monitoring these dynamics can aid individuals and businesses in making informed decisions regarding international transactions.
