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Vietnamese Dong outlook constructive but upside seen limited
Commerzbank links support for the VND to strong realized FDI inflows and growth, but flags oil prices, a widening trade deficit, and elevated US yields as constraints.
Commerzbank’s Asia FX team said the Vietnamese dong has a constructive near term outlook, citing robust realized foreign direct investment inflows and resilient growth. FXStreet reports USD/VND was around 25,994, below its July peak, leaving the VND about 1.2% stronger year to date.
The bank also pointed to factors that could limit further appreciation, including higher oil prices, a widening trade deficit, and still elevated US yields. FXStreet reports Commerzbank expects the State Bank of Vietnam to focus on balancing growth support against inflation, bank system liquidity, and exchange rate stability.
Commerzbank added that recent headline CPI acceleration is expected to be predominantly supply driven, while demand side inflation risks are becoming more material as capital formation expands and consumption continues to grow. FXStreet also notes SBV is contending with inflation above target and rapid credit expansion.
The bank said capacity constraints are emerging alongside this shift, which, together with elevated oil prices, could keep appreciation expectations contained. FXStreet’s report frames this as a balance between sustaining growth and managing inflation and stability.