Vietnam Central Bank Promises FX Intervention as USD Soars

With the U.S. dollar surging against the Vietnamese dong, the State Bank of Vietnam (SBV) today reiterated its commitment to intervene in the foreign exchange market if necessary.

The central bank emphasized its ample foreign currency reserves and flexible monetary tools to ensure stability.

"We are closely monitoring the exchange rate, which is a key indicator of our macroeconomic health," stated Deputy Governor Dao Minh Tu at a regular press conference for March. "The SBV will operate flexibly to maintain purchasing power and market confidence."

The dong has hit record lows against the dollar in recent days, exceeding VND 25,000 per USD on commercial markets. The free market rate reached VND 25,540. This depreciation follows the U.S. Federal Reserve's continued tightening policy, pushing the dollar higher globally.

Tu attributed the pressure on the dong to several factors: the Fed's policy stance, the interest rate differential between the VND and USD, and strong first-quarter trade figures sparking higher foreign currency demand.

However, he noted that the dong, despite depreciating 2.6% against the USD this year, has fared better than many other regional currencies. Japan's yen, for example, has depreciated more than 7.5%.

Reserves and Intervention

Deputy Governor Dao Minh Tu emphasized the SBV's substantial foreign exchange reserves of over $100 billion, providing the firepower needed for market intervention. "We will intervene if the exchange rate becomes too volatile," Tu asserted.

The SBV's recent withdrawals of liquidity from the interbank market, which briefly curbed the dong's slide, underscore the bank's active stance. However, renewed depreciation in the past two days highlights ongoing market pressures.