SBV supports liquidity amid escalating USDVND pressure after Tet

This week, liquidity tensions emerged in the money market after the Tet holiday, with interbank rates rising significantly. In response, the SBV injected liquidity to ease pressure despite escalating USDVND volatility. Specifically, the interbank yield curve steepened, with shorter-term rates declining due to the SBV’s OMO implementation, while longer-term rates rose reflecting the banking system’s expectations for the SBV’s upcoming actions. On the global front, the greenback strengthened as Trump’s tariff executive order fueled fears of escalating trade tensions. Domestically, USDVND surged on concerns that Trump is preparing to announce additional countries subject to export tariffs to the U.S. In the upcoming period, USDVND could face upward pressure as Trump’s tariff policies unfold. Although the stabilizing effects of remittance inflows before the Tet holiday are fading, we still expect that Vietnam’s trade surplus and strong domestic fundamentals will keep USDVND under control.