The USD price on the free market has not cooled down even though DXY has decreased by 3% since the beginning of November

On the world market, the USD Index continued to decrease by 0.2% on the trading day earlier this week, falling below 103.2 points and has now lost more than 3% in value since the beginning of November until now. Thus, the downtrend of the USD in the past two weeks is still maintained.

Analysts predict that this price range will continue to be the market’s main trading area before the FED meeting on December 13, when monetary policy in the US is more clearly defined.

A series of important economic events and data are being watched by the market this week to determine the upcoming policy interest rate trend. However, expectations for the possibility that the FED will begin to reverse monetary policy and cut interest rates in 2024 are increasingly growing. The market is expecting the earliest date to be March 2024 (23% possibility) and the highest to be May 2024 (50%).

Domestically, the central exchange rate is adjusted by the State Bank in both directions, alternating increases and decreases. If compared with early November, on November 28, the central exchange rate decreased by 169 VND, listed at 23,930 VND/USD.

Applying a margin of 5%, the current USD exchange rate commercial banks are allowed to trade is from 22,734 – 25,127 VND/USD.

According to a survey by VnEconomy reporters, at commercial banks, the buying price of USD on the morning of November 28 ranged from 24,005 – 24,200 VND/USD while the selling price remained within the range of 24,410 – 24,430 VND/USD.

Exchange rates on the free market are high. On the morning of November 28, the USD buying price on the free market ranged from 24,550 – 24,670 VND/USD. The selling price remains within the range of 24,630 – 24,720 VND/USD.

Looking back at the USD price on the free market from August 2023 until now, it can be seen that the “black market” exchange rate has mainly moved sideways and increased. Specifically, at the beginning of August, the free USD buying price was at 23,730 VND/USD, selling at 23,800 VND/USD. Thus, cumulatively from August 2023 until now, the “black market” exchange rate has increased nearly 4% and shows no signs of cooling down.

VnEconomy compiled.
VnEconomy compiled.

The domestic USD price is high due to the synergistic effect of the high interest rate difference between VND and USD.

Since the end of September, when exchange rate pressure increased, the State Bank launched a channel to attract money through T-bills. This move helps VND interbank interest rates at some key terms increase in a short time. However, in the week of November 20-24, interbank VND interest rates continued to decrease for most terms of 1 month or less. Closing on November 24, VND interbank interest rates traded around: Overnight was 0.20% (unchanged); 1 week is 0.30% (-0.10 points); 2 weeks is 0.49% (-0.11 points); 1 month is 0.98% (-0.24 points).

Meanwhile, interbank USD interest rates, although slightly reduced in all terms, are still high, the interest rate difference between VND and USD is very large. Updates from market reports show that, on November 24 session, interbank USD interest rates closed at: Overnight was 5.06% (-0.01 ppt); 1 week is 5.14% (-0.03 points); 2 weeks is 5.25% (-0.02 points) and 1 month is 5.35% (-0.02 points).

Since November 9, the State Bank has stopped siphoning money through bidding for State Bank bills. On November 24, the volume of T-bills circulating in the market decreased to VND 71,749.9 billion.

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