EUR/VND Outlook:
The EUR/VND rate is slightly positive but likely to move sideways, trading just above its recent average and close to its 3-month highs. This is mainly influenced by recent trends in the eurozone and Vietnamese economic developments.
Key drivers:
- Rate gap: The European Central Bank has maintained interest rates at 2.00%, while the State Bank of Vietnam faces challenges with tight liquidity and interbank rates rising, creating a mixed impact on the currency pair.
- Risk/commodities: Oil prices are currently significantly above the 3-month average, which can boost the VND due to its effects on trade balances and inflation in Vietnam.
- One macro factor: Vietnam's trade surplus has narrowed by 41% compared to last year, leading to increased demand for foreign currency as imports rise at a faster pace than exports.
Range:
Expect the EUR/VND to drift within its recent 3-month range without testing extremes.
What could change it:
- Upside risk: A notable improvement in German consumer confidence could strengthen the euro.
- Downside risk: Further declines in the trade surplus could weaken the VND and increase demand for foreign currency.
