Will the Vietnamese dong revalue?

Amidst the prevailing external challenges, UOB analysts maintain a positive outlook for the Vietnamese dong (VND). They anticipate the currency to gain strength, underpinned by robust economic fundamentals and a projected recovery in the Chinese yuan (CNY).

The analysts' optimism stems from their assessment of the Vietnamese economy's inherent resilience and its ability to weather economic storms. They foresee this resilience translating into a positive impact on the VND's exchange rate against the US dollar.

Specifically, the UOB team has revised their forecasts for the USD/VND pair, projecting a gradual depreciation of the US dollar against the VND over the next few quarters. This trend is expected to materialize as the Vietnamese economy continues to recover and strengthen its fundamentals.

In terms of the quarterly breakdown, the analysts predict the USD/VND exchange rate to settle at 25,600 in the second quarter of 2024, before easing further to 25,100 in the third quarter. The depreciation is expected to continue into the fourth quarter, with the rate forecasted to reach 24,800.

Moving into 2025, the analysts anticipate the depreciation trend to persist, with the USD/VND exchange rate forecasted to decline further to 24,600 in the first quarter. This projection underscores their confidence in the Vietnamese economy's ability to maintain its momentum and support the VND's appreciation against the US dollar.