Exchange rate under pressure as interest rate gap widens

The USDVND exchange rate continued its upward trend for the fifth consecutive week, a clear response to evolving domestic and international economic landscapes. On the global front, the Federal Reserve’s continued ‘watch-and-see’ stance reflects persistent caution, while escalating geopolitical tensions are driving significant upward pressure on oil prices. Domestically, Vietnam’s robust state budget surplus of over VND305tn in the first five months of 2025 has led to a notable decline in interbank rates, widening the negative differential between the VND and USD interest rates. Looking ahead, exchange rate pressure is likely to persist, largely due to the lingering threat of tariffs that continues to cast uncertainty over trade dynamics. As a result, the SBV will need to proactively manage these pressures, strategically balancing exchange rate stabilization with the imperative of promoting economic growth to meet the year’s objectives.