Flexible exchange rate management "contributes to stabilizing the foreign exchange market"

The State Bank always affirms that it flexibly manages exchange rates in accordance with domestic and international situations, thereby contributing to stabilizing the foreign exchange market and limiting large short-term fluctuations in exchange rates, stabilizing the value of the dong; ensuring smooth liquidity and fully meeting legitimate foreign currency needs.

Last week, the exchange rate between the Vietnamese Dong (VND) and the USD turned down. Specifically, in the last trading session of the week on March 29, the central exchange rate between VND and USD was announced by the State Bank at 24,003 VND/USD, compared to the beginning of the week, the central exchange rate between VND and USD decreased by 12 VND.

With the +/-5% band currently applied, the ceiling rate applied by banks is 25,203 VND/USD and the floor rate is 22,802 VND/USD. The USD price at Vietcombank is listed at 24,590-24,960 VND (buy-sell). Last week, the USD price at this bank increased by 20 VND in both buying and selling compared to the beginning of the week.

The USD price at BIDV is listed at 24,650-24,960 VND (buy-sell). At this level, the USD price at BIDV decreased by 15 VND in the buying direction and increased by 25 VND in the selling direction compared to the beginning of the week.

According to forecasts by international experts and organizations, the VND/USD exchange rate will cool down and decrease to 23,600 VND/USD in the third quarter of this year and 23,500 VND/USD in the fourth quarter of this year.

According to the State Bank, in the free market, the VND/USD exchange rate fluctuates more than in the commercial banking system, but the trading volume in this market is very small compared to the overall activities of the domestic foreign exchange market. Almost all transactions serving the needs of import and export, foreign debt repayment, foreign investment of enterprises and legal transactions of individuals are always fully served by banks in the direction of consistent stability management from the management agency...

In the world market, the USD Index today reached 104.49, down 0.06% at 6:49 a.m. on March 30, Vietnam time. The USD decreased slightly in the last trading session, after a series of US economic data was released.

Investors are focusing on the personal consumption expenditures (PCE) price index report, the preferred inflation measure of the US Federal Reserve (Fed), released on Friday (March 29) to guess the Fed's policy stance.

The report showed consumer spending rose at its fastest pace in just over a year last month, underscoring the economy’s resilience. The U.S. continues to outperform its global peers despite higher borrowing costs, thanks to persistent labor market strength.

“Inflation is slowing and it’s likely to continue through the year,” said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina. “By the time the Fed meets in June, the economic data will be compelling enough for them to start cutting rates.”

The Commerce Department's Bureau of Economic Analysis said its personal consumption expenditures (PCE) price index rose 0.3% last month. January data was revised higher to show the PCE price index rising 0.4%, instead of the previously reported 0.3%.

Economists polled by Reuters had forecast the PCE price index rising 0.4% in February. Commodity prices rose 0.5% in February, driven by a 3.4% increase in gasoline and other energy products.

Prices for leisure, motor vehicles, clothing and footwear also rose sharply. However, prices for furniture, appliances and other durable goods fell. In the 12 months through February, the PCE inflation index rose 2.5%, up from 2.4% in the previous month.

Although price pressures are easing, the pace has slowed compared with the first half of last year and inflation remains above the US central bank's 2% target.

Fed Chairman Jerome Powell said on March 29 that inflation data for February this year was “in line with what we expected.”

Fed officials last week decided to keep the central bank's policy rate unchanged in its current range of 5.25-5.50%, after raising it by 525 basis points starting in March 2022.

Policymakers are forecasting three rate cuts this year, with financial markets expecting the first cut at the June policy meeting.