Shortly after FED announced the schedule to raise the US prime rate in 2018, the VND/USD exchange rate reached VND22,433 on December 22. However, exchange rates offered by various Vietnam-based commercial banks remained on a downward trend in comparison to the beginning of the year. Nonetheless, the VND/USD exchange rate is expected to increase slightly in the following years, to VND22,900 by the end of 2018 and VND23,000 in June 2019 (currently, the rate is VND22,700). Dr. Bui Quang Tin, a lecturer at Banking University of Ho Chi Minh City, explained that, “Pressure on the year-end exchange rate was inevitable because of export-import enterprises’ increasing demand for disbursement.”Tin also added, “As the money market will likely stabilise by the end of the year, the interest rate will have a positive effect on the exchange rate. However, the FED increasing the USD interest rate will create certain pressures on the exchange rate.”To date, the ceiling interest rate for mobilised USD deposits remained 0 per cent per year while monetary policies have not been adjusted since the FED changed interest rate.

Source: VietNamNet News December 29, 2017 09:00 UTC