Market Highlight 22.07.2024

Foreign exchange reserves in the Asia region have decreased this year as central banks had to intervene to support their domestic currencies, with Japan, Indonesia, and South Korea leading the declines. The foreign exchange reserves of the 12 largest economies, from Japan to India, fell by approximately 50 Billion USD that worth only 7,5 Trillion USD by the end of June, while the same period last year saw an increase of 2,2%. Potential changes in the Federal Reserve's monetary policy and the upcoming U.S. presidential election could cause significant volatility in Asian currencies in the second half of this year.

The USD declined nearly 0,2% when the market opened this morning after U.S. President Joe Biden announced the end of his re-election campaign for a second term and endorsed Vice President Kamala Harris as the Democratic candidate in the upcoming election on November 4. The USD Index had recovered nearly 0,3% last week after consistently dropping over the previous three weeks as the market responded positively to the performance of the Republican candidate, former President Donald Trump, whose campaign leans towards higher trade tariffs, easing fiscal policies, and potentially increasing U.S.-China trade tensions. This week, focus will return to the health of the U.S. economy, with attention on the Q2 GDP report and U.S. PMI, especially the closely watched June PCE inflation data by the FED. The signals from this week will further clarify the likelihood of the FED cutting interest rates in September.

The USD/VND exchange rate fell nearly 100 Dong last week, closing on Friday at 25.320 following the recent weakening of the USD with the prospect of the FED cutting rates in September. Although there was a slight recovery at the end of last week, the downward trend of the exchange rate is expected to continue this week, potentially dropping below 25.250.

Asia Commercial Joint Stock Bank assumes no responsibility or liability for any purpose of reference or using the information provided by this newsletter.

Directly contact us to receive market news and consultancy on foreign exchange products and derivatives:

- Financial Markets Division – Email: ktttc@acb.com.vn ; or

- Mr. Khanh Hoang (Financial Markets Senior Analyst) – Email: hoangnk@acb.com.vn