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USD/VND forecast: Vietnamese dong can’t keep pace with rampaging dollar despite central bank tightening

By Nicole Willing

Edited by Vanessa Kintu

15:47, 11 October 2022

One US dollar among Vietnamese dong notes
The USD/VND pair refers to how many Vietnamese dong one US dollar can buy Photo: Dave Primov / Shutterstock

The Vietnamese dong (VND) fell to a record low against the US dollar (USD) last week and remains under pressure in the face of persistent dollar strength. 

The State Bank of Vietnam (SBV) has raised interest rates to reduce the differential with rapidly rising US rates. But with more US Federal Reserve (Fed) hikes to come, the dollar is likely to remain at its highest levels against other currencies in decades,  including the dong.

What is the outlook for the USD/VND exchange rate in the current environment? Will the USD continue to set new highs?

In this article we look at the drivers for the recent performance of the USD/VND pair and the latest forecasts from foreign exchange (forex) analysts.

What drives the USD/VND exchange rate?

In forex (FX) trading, currencies are traded in pairs, which express how much they are worth in relation to each other. The USD/VND pair refers to how many Vietnamese dong one US dollar can buy. The USD is the base currency and the VND is the quote currency.

The SBV sets the reference rate for the value of the dong against the US dollar. The bank has devalued the currency five times since 2014, in a bid to boost exports and control high inflation by ensuring currency stability.

The value of the Vietnamese dong, like any currency, is influenced by the country’s economic growth, trade balance, foreign currency reserves and monetary policy on inflation.

The US dollar is the global reserve currency, viewed by investors as a safe haven to protect their wealth during times of macroeconomic or geopolitical uncertainty. 

The dollar has soared in value this year as the Fed has hiked interest rates by increasingly large amounts in an attempt to control high inflation. Higher interest rates tend to strengthen the relative value of a currency as they attract capital from foreign investors looking for the best returns on their money.

Vietnam’s real gross domestic product (GDP) growth accelerated in the third quarter, climbing by a record 13.67% year on year, up from 7.83% in the second quarter. Growth was led by the services and industrial sectors. The rise benefited from favourable comparisons with 2021 when strict Covid-19 lockdowns disrupted the economy.

Analysts expect Vietnam’s real GDP growth to slow heading into 2023 as retail sales continue to rise, but remain below pre-pandemic levels and the US and Europe, which account for around 40% of the country’s exports.

A widening current account deficit has weighed on the value of the dong, reaching 3.6% of GDP in the first half of 2022. That was up from 1.1% in the whole of last year – the largest deficit since 2010. 

The services deficit could narrow in the second half of the year on a rise in tourism revenue and China’s zero-Covid policy. Although, the economic slowdown in South Korea could limit tourism, according to analysis by Japan-based MUFG Bank.

The dollar hits new highs against the dong

US dollar to Vietnamese dong (USD/VND) 2022 FX chart

The Vietnamese dong traded at 23,922 dong to one US dollar on 11 October, up from 23,515 a month earlier. 

The pair started 2022 at 22,855, sliding to 22,635 in late January before beginning to rally as the dollar strengthened in response to the Russia-Ukraine conflict. The USD/VND then climbed above 23,000 in May as the Fed raised interest rates by 50 basis points (bps), up from March’s 25bp hike, the first since 2018.

By early September the pair was trading above 23,500, and reached a high of 23,875 at the end of the month after the Fed’s third successive 75bp hike.


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0.67 Price
-0.330% 1D Chg, %
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Spread 0.00006

The SBV raised the interbank USD/VND selling rate to 23,700 effective 7 September, from 23,400, and raised it again to 23,925 on 30 September. The SBV had surprised the markets by raising its benchmark interest rate by 100bps to 5.00% following the Fed’s hike on 22 September, the SBV’s largest rate tightening since 2011.

According to MUFG’s analysis:

“The motivation behind this move is to shore up the dong, which hit a record low of 23,875 against the USD in September, and dampen import-led inflation. Further, Vietnam’s headline CPI accelerated to 3.94% y/y in September, which is close to the SBV’s 4% threshold thereby justifying policy tightening done in September. 

“With inflationary pressures to continue to rise in the coming months in part due to higher prices of food and housing and construction materials, and the VND facing more headwinds ahead, we cannot dismiss the possibility of more rate hikes although that is not our base case scenario.”

What is the outlook for the USD/VND pair for the rest of the year with US interest rates to continue to rise?

USD/VND forecast: Analysts revise targets higher

US dollar to Vietnamese dong (USD/VND) 5-year FX chart

Analysts at MUFG have raised their year-end USD/VND forecast for 2022 to the 24,000 level, but expected the pair to retreat from the highs next year to trade at 23,400 by the end of the third quarter.

“We cannot dismiss the possibility of the SBV raising the interbank selling rate again amid a strong US dollar environment, smaller trade surpluses and current account balances in the coming months. That will effectively raise the onshore spot rate for USD/VND with the new interbank rate to act as the pivot,” said the analysts.

The USD/VND forecast from Japan-based Mizuho saw the pair ending the year at 23,700, and then like the MUFG forecast ending the third quarter of 2023 at 23,400:

“With a front loaded 100bps point move, the focus has sharply pivoted towards capital outflow and VND depreciation dangers, as regional outperformance is no consolation for the authorities. While [the] front-loaded move may suffice in the near term to anchor inflation expectations, the risks from [the] stronger USD has taken centre stage as we remain watchful for more hikes if Fed peak rates shift above September Dot Plot.”

Singapore-based United Overseas Bank (UOB) has revised up its USD/VND forecast to reflect continued dollar strength.

“Rising concerns of a China slowdown means VND is still likely to be biased weaker in the coming quarters although losses may be cushioned by a strong domestic growth outlook. Overall, we update our USD/VND forecasts to 24,000 in 4Q22, 24,100 in 1Q23, 24,200 in 2Q23 and 24,300 in 3Q23.”

The bank’s previous USD/VND prediction had the pair trading at 23,550 in the fourth quarter, 23,600 in the first quarter and 23,650 in the second quarter.

US dollar to Vietnamese dong forecasts

Analysts at Malaysia-based Maybank also revised their US dollar to Vietnamese dong forecast to reflect continued dollar strength. Their fourth and first quarter forecasts saw the pair at 23,500, up from 22,900, with the second quarter forecast at 23,400, from 22,700 previously. 

Like MUFG and Mizuho, Maybank also projects that USD/VND will trade at 23,400 in the third quarter of 2023.

“We lifted the USDVND forecast a tad to 23,500 as we expect USD to remain bid in the next few weeks on haven demand and Fed tightening fears. We acknowledge that risks are still to the upside should USDVND retain its bullish momentum. This was in spite of 100bps hike by the SBV that was meant to slow the VND’s depreciation,” according to Maybank’s analysis. “Our forecast encompasses potential USD retracement into Dec due to seasonality factor and cautious optimism for stronger policy supports (such as potential for Covid-zero exit) after the Party Congress in China that could bring some relief to EM Asia FX.”

For the longer term, the USD/VND forecast for 2025 from algorithm-based forecasting service Wallet Investor shows the pair trading at 23,868.96 at the end of 2022 and 23,797.39 at the end of 2023. The USD could weaken slightly to 23,554.43 in five years’ time. At the time of writing (11 October), analysts had yet to issue a USD/VND forecast for 2030.

When evaluating any US dollar to Vietnamese dong forecast to inform your trading, it’s important to remember that currency markets are highly volatile, making it difficult for analysts and algorithm-based forecasters to come up with accurate long-term predictions. 

We recommend that you always do your own research. Look at the latest market trends, news, technical and fundamental analysis, and expert opinion before making any investment decision. Keep in mind that past performance is no guarantee of future returns. And never invest money you cannot afford to lose.


Why has USD/VND been rising?

The USD/VND forex pair is trading at record highs on the US dollar's persistent strength, supported by the Fed’s rapid interest rate hikes.

Will USD/VND go up or down?

As of 11 October, analysts expected the USD/VND pair to peak around 24,000 and then retreat slightly in 2023 towards 23,400. The direction of the pair will depend on economic performance in Vietnam and the US as well as central bank policies on interest rates.

When is the best time to trade USD/VND?

The best time to trade on forex markets is around the release of major economic announcements, such as trade data, inflation and interest rates.

Is USD/VND a buy, sell or hold?

How you trade the USD/VND pair is a personal decision depending on your risk tolerance and investing strategy. You should do your own research to take an informed view of the market. Remember to never invest or trade money that you can’t afford to lose.

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