On Oct 19, the USD price in the banking and free market continued to increase by 100-120 VND compared to the day before to a new record of 24,620 and 24,700 VND, respectively.

The USD/VND exchange rate at commercial banks has increased by 200-400 dong in just three days, since the new exchange rate band was applied.

As of 10 a.m. on the date, at Vietcombank, the USD price has increased by nearly 400 VND, equivalent to an increase of 1.6% in the past three days. USD price at BIDV increased to 24,350 – 24,630 VND; Eximbank also increased their USD price by nearly 200 VND to 24,280 – 24,640 dong.

On the free market, the USD price also surpassed 24,700 VND for the first time. Foreign currency exchange points continued to raise the buying and selling price of US dollars by 100 VND to 24,600 – 24,720 dong.

The domestic USD price went up strongly after the State Bank allowed to raise the exchange rate band by 2% from October 17. This move took place in the context of unpredictable movements in the international market as central banks around the world continued to tighten their monetary policy.

The USD index – a measure of the currency’s strength – increased 0.03% to 112 points and remained at a 20-year high.

Since the beginning of 2022, Vietnam’s foreign exchange reserve fund has decreased by about 20% when the State Bank partly intervened to stabilize the exchange rate. There is not much room left for interest rates and derivatives. Experts forecast that the demand for USD fluctuates in the last months of the year, which may put the exchange rate under a lot of pressure.

Currently, 60-70% of Vietnam’s import trade contracts are paid in USD. Since the beginning of the year, the VND has depreciated by more than 7.4% against the US dollar, which is putting pressure on costs for businesses that import raw materials and goods. Many companies said that imported products had a sharp increase in price (not regarding of the increase in shipping costs and other costs).

In the opposite direction, exporters of goods benefit when the USD goes up, but the impact is not only one-way. Because of the increase in the USD price, exporting enterprises will also be under pressure of increased importing cost of raw materials and accessories (Vietnamese exporters often have a very large proportion of imported raw materials).

Source: vnexpress.net