The recent exchange rate forecasts for the EUR to VND point to a complex interplay of macroeconomic factors influencing both currencies. The euro has shown resilience despite weak economic data from Germany, buoyed by its negative correlation with a declining US dollar and the expectation that the European Central Bank (ECB) is less likely to continue cutting interest rates. A recent update noted that the euro is trading near 30,485 VND, just below its three-month average, indicating a stable performance in a relatively tight range.
Analysts suggest that as the ECB adopts a more dovish stance, with expectations of rate cuts to 3.5% by late 2025, this could reduce the interest rate differential with the US Federal Reserve. Such developments might weaken the euro if investor sentiment shifts towards the USD, especially given the Fed's recent rate cuts which have eased pressure on emerging market currencies, including the Vietnamese dong (VND).
For the VND, forecasts predict a depreciation of about 3% against the USD as Vietnam faces pressures from external economic factors, including trade tensions with the US, which have already prompted tariff impositions. This environment may hinder VND stability, necessitating intervention from the State Bank of Vietnam, which has already taken steps to stabilize the currency through substantial foreign exchange sales.
The ongoing war in Ukraine and rising global oil prices, currently fluctuating around 65 USD per barrel, are further complicating factors for the euro. Higher oil prices can lead to increased inflation in the Eurozone, potentially influencing ECB policies and, by extension, the euro’s value. Given the euro's significant role in global markets, any shifts in oil price trends could affect investor confidence and trade balances, further impacting the EUR/VND pair.
Overall, while the euro appears to hold steady in the short term, risks remain from both the ECB's policy moves and geopolitical developments that could sway its value against the VND. Currency market participants should closely monitor these evolving trends for potential impacts on international transaction costs.
