On 7 September, the US dollar moved only slightly against the dong in quotes from Vietnamese banks as the market awaited signs of tightening by the Bank of Japan and guidance on the Federal Reserve’s policy outlook. The reference rate was VND25,611 per USD1, while banks’ buying and selling rates were set at around VND25,870–26,285.
US dollar exchange rates edged lower at major Vietnamese banks on the morning of 7 September. New indications regarding expectations for a Bank of Japan rate hike and the Federal Reserve’s policy outlook were reported to be influencing the market.
The State Bank of Vietnam’s reference rate was VND25,611 per USD1, up VND6 from the previous day. The trading band was ±5%, with an upper limit of VND26,891 and a lower limit of VND24,331. Banks’ buying and selling rates for the US dollar were generally quoted in a range of VND25,870–26,285, with some showing slight declines from the previous day.
The market has grown more confident that the Bank of Japan will continue tightening monetary policy, while expectations of a stronger yen are putting pressure on the US dollar. Meanwhile, the Federal Reserve’s policy outlook remains uncertain following the release of US employment data.
The market is pricing in a 25-basis-point rate hike at the Bank of Japan’s monetary policy meeting on 17–18 September, while retaining the possibility of an additional hike in December. Attention is focused on the PPI and CPI releases scheduled for 10 and 11 September, with the US dollar’s movements expected to depend on the inflation data.