Given the broad Dollar strength, the Dong has weakened by roughly 8.2% year-to-date against the USD. Economists at ANZ Bank expect the Dong to weaken further.

VND will likely weaken further

“We expect USDVND to reach 25,000 by year-end and remain elevated for longer.”

“Financial market developments such as Dollar strength will likely be the key reason behind further VND weakness, but a deteriorating export outlook also doesn’t bode well.”

“The State Bank of Vietnam (SBV) is also exhibiting greater tolerance for a weaker currency. Alongside fixing the reference rate weaker, it has also adjusted Dong’s trading band to 5% from3% earlier. In fact, from a peer-perspective, VND also looks over-valued among Asian currencies and further adjustments may be warranted, especially in an environment of slowing global trade to prevent loss of competitiveness.”