Market Highlight 25.04.2025

According to the Vietnamese Government’s 2024 report on thrift practice and waste prevention, public debt was estimated to reach approximately VND 4,26 quadrillion by the end of 2024, equivalent to 34,7% of GDP. This level is considered well within the safety threshold and significantly below the 60% GDP ceiling set by the National Assembly. In terms of structure, government debt accounted for 32,2% of GDP, while external debt stood at 31,8%. A notable positive is that 76% of government debt was mobilized domestically, primarily through bond issuance, thereby mitigating foreign exchange risk and enhancing fiscal autonomy. The government aims for GDP growth of over 8% in 2025, with public debt projected to remain between 36% and 37% of GDP. 

Meanwhile, policymakers at the European Central Bank (ECB) have increasingly signaled the possibility of further rate cuts, with some even suggesting a potential reduction of 50 basis points, instead of the customary 25. Last week, the ECB implemented its seventh consecutive cut, lowering its key policy rate by 25 basis points to 2,25%. Market expectations now reflect over a 90% probability of another 25-basis-point cut in June, with two to three additional reductions potentially on the horizon in the latter half of the year. Future rate decisions are expected to hinge on the evolving outlook for economic growth and inflation, especially amid unresolved global trade tensions between the United States, China, and other economies. The EUR has entered a downward correction to around $1,1370 since the start of the week, retreating from the $1,15 resistance level touched last week, although the six-month target remains at $1,20. 

Domestically, the USD/VND interbank exchange rate extended its upward momentum for the third consecutive session on Wednesday, closing at 26.045. A sharp decline in short-term VND interbank lending rates, coupled with the USD’s recent rebound, has helped keep the exchange rate above the 26.000 threshold. The market is expected to remain stable within the range of 25.950 to 26.080 throughout the day.

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