SBV back to withdrawal as DXY surged

This week, the SBV significantly withdrew liquidity after injections in previous weeks, as the USD strengthened further. As a result, the interbank yield curve experienced a notable increase in short tenors. On the global front, the DXY rallied following robust U.S. labor data, which dimmed hopes for further rate cuts, and anticipation of Donald Trump’s inauguration as the next U.S. president. Additionally, heightened geopolitical tensions further bolstered the strength of the greenback. Despite these global developments, domestic exchange rate pressures continued to ease, largely due to prior SBV interventions in the interbank market. Ahead of the Lunar New Year holiday, we anticipate that the USD will remain volatile as Trump’s return draws closer. However, with positive fundamentals and developments, as mentioned previously, USDVND is expected to remain stable in the coming weeks.