The State Bank of Vietnam has raised its reference exchange rate to another high this week following the U.S. Federal Reserve’s first interest rates hike in three years.
The central bank’s rate was set 0.02% higher at VND25,632, marking the fourth consecutive session in which the bank has raised its rate, following three weeks of a sideways trend and slight declines.
Banks are currently allowed to list the U.S. dollar within a 5% band around the rate. Lender BIDV raised its exchange rate by 0.04% to VND26,185. On the black market the greenback went up 0.19% to VND25,820.
The U.S. Federal Reserve on Thursday raised its benchmark interest rate by 25 basis points to 3.75%-4%. It was the first rate increase by the central bank since July 2023.
The greenback strengthened following the decision. The Dollar Index, which measures the strength of the U.S. dollar against a basket of six major currencies, rose to around 100.34, its highest level in nearly seven weeks. The index has gained about 1.3% over the past week and 0.7% from a month earlier.
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An employee counts Vietnamese banknotes at a bank in Hanoi. Photo by VnExpress/Giang Huy |
Nguyen Hoan Nien, an analyst at Shinhan Securities, said the Fed’s rate hike could put additional pressure on the USD/VND exchange rate over the next few weeks.
The exchange rate could stabilize again in the final quarter of the year if the Fed does not raise interest rates further. However, he said the actual developments will also depend on many other factors and need to be monitored further.