HÀ NỘI - Sharp fluctuations in exchange rates during the first half of 2025 have significantly raised financial costs for Vietnamese importers and companies with foreign currency loans, cutting into profits across several sectors.

Although pressures are expected to persist into the latter half of the year, the State Bank of Việt Nam (SBV) has reaffirmed its commitment to a proactive, flexible monetary policy aiming to manage exchange rates in line with macroeconomic fundamentals and ensure smooth functioning of the forex market.

Sharp movements

According to Phạm Chí Quang, Head of the SBV’s Monetary Policy Department, the Vietnamese đồng (VND) depreciated by around 2.8 per cent against the US dollar by the end of June, despite the dollar index falling to its lowest level in three years.

“This is largely due to the widening interest rate differential between the VND and the USD, as domestic interest rates were slashed to spur economic growth following government directives,” Quang said.

As of July 25, official exchange rates ranged from VNĐ25,930–26,330 per US dollar at major commercial banks, compared to late June levels of around VNĐ26,270. On the informal market, rates even exceeded VNĐ26,480 - showing continued upward momentum.

Beyond the dollar, the đồng also weakened against the euro and the Japanese yen. At Vietcombank, the EUR/VND rate stood at VNĐ31,470 and the JPY/VND at VNĐ182.08, both up over 10 per cent since the start of the year.

Nguyễn Thế Minh, Director of Retail Research at Yuanta Vietnam Securities, said the USD/VND pair had risen sharply, driven by interest rate gaps and higher demand for US dollars. Việt Nam’s trade surplus, typically a buffer, had also weakened this year.

In the first six months of 2025, total trade turnover reached over US$431 billion, up 16 per cent year-on-year. Exports rose 14 per cent to $219 billion, while imports surged nearly 18 per cent to over $212 billion. The trade surplus narrowed to just $7.2 billion, a 41 per cent drop from the same period in 2024.

Foreign investors have also withdrawn roughly VNĐ40 trillion from the stock market so far this year, further pressuring the forex market, according to SBV.

Looking ahead, Quang warned of potential additional pressure stemming from tax policies under US President Donald Trump.

“With Việt Nam’s high level of trade openness and reliance on the US market, such shifts could affect both exchange rates and interest rates as global capital flows adjust,” he said.

Given that Việt Nam’s foreign reserves are equivalent to 2.5 times its short-term external debt and cover 2.9 months of imports, the central bank has limited room to aggressively stabilise the currency through direct intervention.

Instead, the SBV has opted to gradually adjust the central exchange rate, accepting a controlled level of depreciation to absorb external shocks, protect dwindling reserves, and preserve export competitiveness.

Higher costs

While the VND’s depreciation remains within manageable limits and has not triggered macroeconomic instability, it has clearly dented corporate earnings, particularly among importers and businesses with foreign currency debt.

At Hoàng Gia International Corporation (RIC), financial income dropped 34 per cent to just VNĐ5.4 billion in H1, largely due to exchange rate losses.

At its annual general meeting in late June, Airports Corporation of Việt Nam (ACV) expressed concern that despite signs of recovery in the aviation industry, the company could suffer losses of up to VNĐ1.7 trillion this year due to exchange rate fluctuations,  particularly with JPY.

ACV’s Chief Accountant Nguyễn Văn Nhung noted that the JPY/VND rate has climbed from 153 to 182 so far this year, and could exceed 185 by year-end. Overall, ACV’s estimated pre-tax profit for the first half was just VNĐ5.851 trillion, down 23 per cent year-on-year.

National flag carrier Vietnam Airlines voiced similar concerns. CEO Lê Hồng Hà told shareholders that, despite projecting a 3.5 per cent revenue increase to VNĐ116.715 trillion, the company expected just VNĐ5.554 trillion in profit, only 66 per cent of last year’s result.

Hà said that the aviation sector was particularly sensitive to currency movements, with about 65 per cent of the airline’s operating costs denominated in foreign currencies. Exchange rate volatility, geopolitical tensions such as the Iran–Israel conflict, and rising fuel prices had all forced the airline to reroute flights and absorb higher expenses.

Analysts believe pressure on the exchange rate may ease in the near future. Optimism is being fuelled by recent Việt Nam–US trade agreements and expectations that the US Federal Reserve may begin reversing its tightening cycle.

UOB Bank (Singapore) forecasts the USD/VND rate to average VNĐ26,400 in Q3 2025, then gradually decline to VNĐ26,200 in Q4, VNĐ26,000 in Q1 2026, and VNĐ25,800 by Q2 2026. In a recent macroeconomic outlook, VCBS Securities said the forex market is showing positive signs, projecting the VND to depreciate by a reasonable 3-4 per cent for the full year, a level seen as manageable under current conditions. VNS