Market Highlight 21.05.2025

The People’s Bank of China (PBOC) on Monday announced a policy rate cut aimed at stimulating domestic demand. Specifically, the 1-year Loan Prime Rate (LPR) was reduced to 3%, while the 5-year LPR was lowered to 3,5%. This marks the first benchmark lending rate reduction of the year, following a series of prior monetary easing measures - such as cutting various lending rates and injecting liquidity into the banking system - intended to boost domestic consumption ahead of Beijing’s surprise 90-day trade truce agreement with the United States.

According to the General Department of Vietnam Customs, the country’s total merchandise trade value in the first half of May reached USD 36,09 billion, down 6,8% (USD 2,64 billion) compared to the second half of April (April 16 - 30). Of this, exports amounted to USD 16,88 billion, representing a sharp 18,3% decline (USD 3,77 billion). On the other hand, imports rose 6,2% (USD 1,13 billion) to USD 19,21 billion. As a result, Vietnam recorded a trade deficit of USD 2,33 billion for the first half of May, bringing the year-to-date trade surplus as of May 15 down to approximately USD 1,74 billion.

The USD Index (DXY) posted a second consecutive day of declines (-0,37%), weighed down in part by more cautious commentary on the economic outlook from several Federal Reserve officials. The greenback also came under pressure following reports that President Donald Trump failed to garner full support from House Republicans for his comprehensive tax reform proposal. Domestically, the interbank USD/VND exchange rate remained largely stable on Tuesday, trading mostly within the 25.950 - 25.960 range. With foreign currency demand continuing to emerge in the latter half of May, the exchange rate remains supported and may sustain its current upward bias in the near term.

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