Dovish Fed, decisive SBV amid USDVND movement

This week, USDVND spiked early before easing by week’s end, driven by both external and domestic factors. On the global front, the dollar softened after Chair Powell signaled openness to a rate cut at the upcoming FOMC meeting amid signs of softening in the U.S. labor market. On the domestic front, the SBV announced cancelable USD forward sales on the interbank market, underscoring its resolve to stabilize the exchange rate. As most themes this year point to ongoing depreciation pressure on the dong, the effectiveness of the SBV’s action will be closely scrutinized.