The USD/VND outlook is range-bound as the exchange rate is currently at 90-day lows, just below the 3-month average. This positioning suggests limited immediate volatility.
Key drivers:
- Rate gap: The U.S. Federal Reserve's recent interest rate cuts are easing upward pressure on the USD, while the State Bank of Vietnam seems cautious, affecting the VND's relative strength.
- Risk/commodities: Recent oil prices have remained stable, which helps the VND as Vietnam's economy is sensitive to fluctuations in global oil prices.
- One macro factor: The IMF's approval of a currency adjustment for the VND indicates a shift that may support broader economic stability going forward.
Range: The USD/VND is likely to hold within its recent very stable range, drifting slightly unless significant changes occur.
What could change it:
- Upside risk: Strong U.S. labor market data could increase USD demand, pushing up the exchange rate.
- Downside risk: Continued easing by the Fed could further weaken the USD, leading to a stronger VND.