Market Highlight 23.05.2024

The USD Index increased by nearly 0,3% yesterday that marking its third consecutive session of gains after the May FOMC minutes revealed concerns among Committee members about rising inflation in the U.S. during the first quarter. While the FED believes that the current policy interest rate of 5,25-5,5% is sufficiently high to slow the economy and curb domestic prices, some members are willing to support further rate hikes if inflation continues to rise. The May FED meeting occurred two weeks before the April CPI report indicated signs of cooling inflation. Since then, market sentiment has improved as the FED Chair ruled out the possibility of rate hikes this year in recent remarks, leading the USD to drop nearly 1,5% to 104 points and U.S. stocks to hit new record highs. According to FED Governor Christopher Waller on Tuesday, the FED does not necessarily need to cut rates this year if inflation does not decrease significantly as expected. Maintaining the current high rates will not push the U.S. economy into recession in the next 3-4 months, but any signs of increasing inflation could completely reverse the FED’s stance.

The USD/VND interbank exchange rate maintained an upward trend for most of yesterday, above the USD intervention selling price (25.450) but below the SBV’s ceiling rate. During the day, the central exchange rate adjusted up to 24.254 (+3 VND) while the effective ceiling rate was at 25.467. The demand for foreign currency remained high yesterday, combined with the State Treasury’s foreign currency purchase demand, supporting the exchange rate’s increase. The SBV continued to supply over 350 Million USD to meet market demand. Alongside this, the SBV eased pressure on the exchange rate by raising the winning bid rate in the Open Market Operations (OMO) channel from 4,25%/year to 4,5%/year and the rate on the issuance of treasury bills to 4%/year. 

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

- Ms. Hong Anh (Financial Markets Researcher) – Email: anhkh@acb.com.vn