EUR/VND Outlook:
The EUR/VND is currently below its recent average and near its three-month lows. The outlook is likely to decrease, given the pressures from rising geopolitical risks and energy costs.
Key drivers:
• Rate gap: The European Central Bank's challenges with inflation and lower growth contrast with Vietnam's stable GDP growth target.
• Risk/commodities: With oil prices significantly above average, the added inflationary pressures hurt the euro while benefiting the VND.
• One macro factor: Vietnam's cautious monetary policy stance may enhance confidence in the dong amid external pressures.
Range:
Expect the EUR/VND to test its lower extremes, potentially drifting lower within its recent range.
What could change it:
• Upside risk: Any easing of geopolitical tensions or a drop in oil prices might support the euro.
• Downside risk: Further escalation in the Middle East could lead to a sharper decline in the euro's value.
