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Analyst Pin-board Rising pressures on the dong’s stability

The dong has depreciated about 1.7% ytd but is the least volatile compared to other currencies. A more hawkish Fed will keep USD at its record high for a while. The yuan’s depreciation is expected to ease in 2H22. Vietnam’s balance of payments faces turbulences in 2022. The dong to depreciate about 2.0-2.5% in 2022. The dong has depreciated about 1.7% since the beginning of the year

Recently, the dong has been under pressure of depreciation mainly due to the impact of 1) changes in the Fed rate hike’s outlook; 2) the strong appreciation of the DXY is associated with the depreciation pressure of the yuan; and 3) unfavorable Vietnam’s trade balance and USD supply/demand. Since the beginning of the year, the USD/VND exchange rate listed at Vietcombank has increased by approximately 2.0%. The average exchange rate of commercial banks according to Bloomberg's statistics increased by about 1.7%, in May and the first half of June alone, the dong depreciated about 1.0% on the official market. Compared to the lowest level recorded at the end of January, the dong depreciated about 2.5%. In terms of absolute numbers, the USD/VND exchange rate in the unofficial market touched 24,000 dong on the selling side, however, in terms of percentage change, the dong has depreciated by about 1.6% in the unofficial market