EUR/VND Outlook:
The EUR/VND exchange rate is likely to move sideways as it is trading near its recent average, showing mixed signals. While the Eurozone maintains economic stability, recent domestic pressures on the Vietnamese Đồng complicate the outlook.
Key drivers:
• Rate gap: The European Central Bank's cautious stance on interest rates differs from Vietnam's liquidity pressures, leading to a stable Euro versus a volatile Đồng.
• Risk/commodities: Oil prices are significantly above their recent average, which typically supports the Euro due to its impact on inflation in Europe.
• One macro factor: Vietnam's trade balance is tightening, with imports growing faster than exports, increasing the demand for foreign currency and putting pressure on the VND.
Range:
Expect the EUR/VND to hold within the current 3-month range as external factors weigh on the Đồng's performance.
What could change it:
• Upside risk: A stabilization of the global economy, improving the Eurozone's growth prospects.
• Downside risk: Continued domestic liquidity issues in Vietnam that further weaken the Đồng.
