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MONETARY MARKET UPDATE MAY 2025: ANCHORING AGAINST THE TIDE

The State Bank of Vietnam (SBV) conducted net withdrawals on the open market in May 2025, with the volume of collateralized lending via open market operations (OMO) falling sharply compared to the previous month.
Interbank interest rates and deposit rates remained stable throughout the month.
Commercial banks continued to promote mortgage lending, especially targeting young homebuyers through preferential interest rate packages, while the Government urged banks to participate in large-scale credit programs to accelerate national strategies on infrastructure development and digital transformation.
Despite external pressures, credit growth maintained strong momentum in April 2025, with the credit outstanding as of April 28th already surpassing full-year growth expectations.
Three notable and significant changes in the global monetary landscape: 1. Rising concerns about debt and fiscal deficits, especially following Moody’s recent downgrade of the US sovereign credit rating; 2. The possibility of foreign exchange market interventions being included in trade negotiations with the US; 3. A visible trend of foreign reserves diversification, reducing overreliance on the US dollar.
We believe these developments will shape a medium- and long-term outlook of weakening US dollar strength. Overall, this trend is expected to be favorable for maintaining VND stability.
A favorable outcome of the negotiations will help to contain the depreciation of the VND. Currently, we still maintain the view that the VND may depreciate by 3-5% in 2025.