This is the highest rate since this year’s January launch of the new forex rate methodology using a central reference rate for the dong/dollar daily based on an eight-currency basket and macro-economic conditions.

Compared with earlier this year, the rate rose by 0.96 %.

The US dollar has been strengthening against the dong, both on the official and unofficial markets, after the US presidential election result was announced on November 9.

Domestic commercial banks this week alone increased the dong/dollar rate by up to 90 dong. Currently, commercial banks are allowed to trade the dollar at +/-3 % on either side of the reference rate, or between VND21,423 and VND22,749.

Commercial banks on November 17 continuously revised upwards their offering prices by 50 dong against the previous day, listing the selling rate at between VND22,465 and VND22,500.

With a rise of 50 dong for selling against the previous day, the Asia Commercial Bank (ACB) listed the dollar at the highest rate of VND22,500 among all commercial banks.

Sacombank also raised the US dollar prices by 40 dong against the previous day, both for buying and selling, to trade the dollar at VND22,400/VND22,480, respectively.

Vietcombank also increased the rate by 50 dong and 40 dong for selling and buying against the previous day, listing the rate at VND22,395 and VND22,465.

The buying/selling rate listed at the Bank for Investment and Development of Vietnam (BIDV) was also high at VND22.410/VND22.480.

In the global market, the dollar index, a measure of its value against a basket of currencies, rose to 100.53 on Wednesday, its highest since April 2003, according to Reuters.

The dollar also rose 0.5 % against the yen to a five-month high of 109.75 yen, rose to an eight-year high against the Chinese yuan of 6.8703 yuan and the euro fell below US$1.07 for the first time in a year.

Dao Van Hung, member of the National Financial and Monetary Policy Consultation Council and director of the Ministry of Planning and Investment’s Policy and Development Institute, attributed the strengthening of the dollar against the dong to investors betting that US President-elect Trump’s plans to cut taxes and boost infrastructure spending would boost economic activity while his proposals to deport illegal immigrants and impose tariffs on cheap imports are seen driving inflation higher. That prospect has given rise to expectations that US interest rates will rise faster than previously anticipated. 

Meanwhile, dollar demand in the domestic market is high, as local firms need more foreign currencies to pay their import bills at year-end, he said.

Despite the strengthening of the dollar against the dong, Hùng said, demand and supply sources of the dollar on the domestic market remain stable, adding that the exchange rate therefore sees no significant pressure.

According to Hung, the impact of the strengthening of the dollar in the global market on Vietnam’s forex market has not been significant as Vietnam hasn’t been fully open its financial market.

In addition, compared with the currencies of Vietnam’s large trade partners, the dong/dollar exchange rate is currently reasonable and has not had a negative impact on the country’s trade competitiveness, Hùng said.

Hung forecast that the domestic forex market would see no significant pressure at year-end thanks to the rising foreign direct investment (FDI) capital in the country and the trade surplus.

In the first 10 months of this year, Vietnam reported a rise of 7.6 % in FDI disbursement, reaching US$12.7 billion, and a trade surplus of $3.2 billion.

The central bank’s flexible reference rate would help minimise the negative impact of global volatility, Hung said, adding that the policy also contributes to dampening speculation in the forex market.

The central bank can also intervene in the market through futures contracts with local commercial banks besides using foreign reserves of more than $40 billion – a record high in recent years – to stabilise the forex market.