SBV strengthens liquidity withdrawal amid amplified USDVND pressure

This week, the SBV strengthened liquidity withdrawal as exchange rate pressures intensified. As a result, the interbank rate curve shifted upward across most tenors following the SBV’s actions. On the foreign exchange market, after the FOMC meeting where the Fed signaled a more hawkish stance and reduced the projected number of rate cuts from four (as estimated in September) to just two, the DXY surged beyond a 2-year high. Domestically, the USDVND ask price touched the ceiling rate and at times exceeded the SBV’s selling price, possibly prompting the central bank to implement intervention measures to mitigate these pressures. Looking ahead, we anticipate that exchange rate pressures will persist and continue to exert strain on domestic activities, potentially intensifying as Donald Trump’s inauguration approaches in January 2025.