Dollar climbs to highest peak against Vietnamese dong

The State Bank of Vietnam (SBV) set the reference rate for the Vietnamese dong at VND23,295 Monday morning, leaving the Vietnamese dong at its lowest in recent history.

Some banks this morning raised the dollar’s price to over VND23,800 for the first time ever.

Vietcombank, the country’s largest lender, sold the greenback for VND23,810, up more than 3.9 percent from the beginning of this year. This is the rate state-owned lender BIDV announced the same day. At VietinBank, the listed price was VND23,809.

The dollar price fluctuated less in the private banking sector, and some even reduced their selling price.

Techcombank,the country’s largest private lender, raised the exchange rate to VND23,811, a slight increase from the end of last week. Eximbank kept the rate at VND23,790.

Dollar prices also increased on the unofficial market, selling at VND24,160 Monday.

Interest rate hike is expected to further push the Dollar Index – which measures the strength of the dollar against a basket of international currencies. It is currently at 109.8 points, a 20-year high.

According to U.S. Federal Reserve Chairman Jerome Powell, the path to lower inflation will be slow and difficult. He stated that interest rates will remain high for some time in order to keep inflation at three times the Fed’s 2% target.

Truong Van Phuoc, former acting chairman of National Financial Supervisory Commission, predicted that the FED would continue to hike interest rates on September 21. He said Vietnam must keep the exchange rate “stable” since it was an important front line tool in the fight against inflation. Currently, the U.S. dollar is used to pay for 60-70% of import-export contracts.

The dong has depreciated by more than 3.9% against the dollar since the beginning of the year, putting pressure on costs for enterprises that import raw materials and commodities and pay with the greenback.

Many businesses reported that the price of imported goods has increased by 1.5-2%, excluding the increase in shipping and other costs. Export firms will be under pressure from the higher costs of imported raw materials and accessories.