Market Highlight 22.01.2025

    The U.S dollar has entered a period of elevated volatility as the market receives unclear signals on potential tariff policies under newly inaugurated President Donald Trump. The USD Index edged back up to 108 yesterday after a steep 1,24% drop on Monday, reflecting weakness in five of the past six trading sessions. The new U.S administration’s tariff proposals currently exist only as pronouncements from President Trump himself, with no concrete timetable or detailed plan revealed. The latest update suggests that the U.S will impose tariffs on European goods and raise import duties by 10% on Chinese goods starting February 1, simultaneously increasing tariffs on goods from Canada and Mexico by 25%. From now until February 1, the U.S is set to expedite trade negotiations with its partners.
   The market remains cautious in response to the President’s latest tariff declarations. However, if the likelihood of tariff hikes becomes more substantial, the USD’s upward momentum could quickly reemerge near February 1, given that these measures would escalate global trade uncertainty and reinforce the greenback’s safe-haven appeal. Speaking to the media earlier this week, President Trump reiterated his intent to address U.S trade imbalances either through tariffs or by prompting trading partners to purchase additional US goods and services.
   The USD/VND exchange rate continued its downward trajectory on Tuesday morning, hitting 25.240, then rebounded to 25.275 by day’s end, marking a net drop of about 15 VND compared to the 25.290 opening level. Observers noted that most market participants have already fulfilled their VND liquidity needs prior to the upcoming holiday, suggesting that interbank VND trading may stabilize by the end of this week. The USD/VND rate is forecast to rise slightly above 25.300 today.

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