Market Highlight 17.10.2025

Bank of Japan (BoJ) Governor Kazuo Ueda stated that the Central bank would continue to tighten monetary policy should the economic outlook improve - signaling the possibility of further rate hikes in the near term. Market expectations currently place the probability of a 0,25% BoJ rate increase at around 20% for the October 30 meeting, down sharply from 70% just a few weeks ago, following the surprise election of Sanae Takaichi, a known proponent of monetary easing, as leader of the ruling Liberal Democratic Party (LDP) earlier this month. While political uncertainty in Japan is influencing short-term policy options, the recent sharp depreciation of the JPY could compel the BoJ to act sooner to prevent inflation from becoming unanchored. Earlier this month, Governor Ueda highlighted that the global economic outlook - particularly that of the United States - and the impact of U.S tariffs on Japanese corporate profits would remain key considerations. Speaking last night, Ueda noted that G20 members generally viewed the global economy as resilient, though it continues to face heightened uncertainty and complex challenges, including geopolitical and trade tensions.  

The USD weakened by 0,33% overnight, marking its third consecutive daily decline against major currencies as U.S - China trade tensions intensified and markets digested recent Federal Reserve commentary. The U.S September inflation report is scheduled to be released by the Bureau of Labor Statistics next Friday, October 24, ahead of the FED’s October policy meeting.  

Domestically, the USD/VND interbank rate edged lower, trading within a narrow range of 26.335 - 26.345 on Wednesday and closing the day at 26.340. The State Bank of Vietnam (SBV) reduced the central exchange rate by VND 5, setting the effective ceiling rate at 26.364. The interbank market is expected to continue trading around 26.350 today.

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