HÀ NỘI — The foreign exchange market has immediately seen a relief after the State Bank of Vietnam (SBV) started to intervene in the market by selling the US dollar through forward contracts.

On August 25 and 26, SBV sold the dollar through 180-day cancellable forward contracts at a fixed price of VNĐ26,550 per dollar. Only banks with negative foreign currency positions are eligible to purchase the forwards. To maintain FX balance, each eligible transaction is limited to the amount needed to offset the bank’s net deficit. Cancellation rights are also capped three times for deals above US$100 million and twice for smaller deals.

The SBV’s policy aims to set to cap the interbank FX rate near the VNĐ26,550 threshold and suppress speculation of a further FX ceiling hike in the context that the USD/VNĐ exchange rate has surged sharply recently.

The SBV’s central rate, which has so far this year increased by 3.9 per cent, has recently hit a record high of VNĐ25,298 per dollar. With a margin of 5 per cent, commercial banks are allowed to trade the dollar in the range of VNĐ24,026 - 26,556 per dollar.

This is not the first time the SBV has used the forward sale method to cool down the FX market. In 2024, the SBV sold the dollar twice in April and October.

The exchange rate has quickly reacted, dropping significantly after the SBV’s move.

On Monday, the SBV’s central exchange rate was announced at VNĐ25,291 per dollar, down VNĐ7 compared to the closing session at the end of last week. Previously, the SBV’s central rate increased sharply by VNĐ49 last week and set a record of VNĐ25,298 per dollar.

The USD/VNĐ exchange rate at commercial banks on the day also fell sharply back to the trading level of a week earlier. Specifically, banks adjusted down both buying and selling prices by VNĐ46-124 per dollar to VNĐ26,080-26,125 for buying and VNĐ26,465-26,506 for selling.

On the interbank market, the exchange rate closed the day at VNĐ26,330 per dollar, down VNĐ103 compared to August 22.

However, the dollar on the unofficial market remained high at VNĐ26,510-26,580 per dollar.

Nguyễn Thế Minh, director of the Yuanta Vietnam Securities Company’s Research and Development for Individual Customers, said that the SBV's move is mainly aimed at slowing down the recent surge in exchange rates.

According to Minh, every time the exchange rate increases, the SBV often sells the dollar to calm the market, while supporting banks that are in negative dollar status.

In addition, Minh said, another goal of this time’s dollar sale is to increase liquidity in the banking system.

Minh assessed that this as a psychological move, aiming to anchor market expectations.

Minh also noted that the exchange rate pressure is still large as the demand for dollar remains high due to the trend of foreign capital withdrawal and an increase in good imports from the US in the context of a rising trade deficit.

Regarding the outlook until the end of this year, Minh said that remittances and FDI are still important foreign currency sources for Việt Nam, especially in the fourth quarter of each year when remittances flow in large amounts. Therefore, it will contribute to reducing pressure on the exchange rate according to the cycle.

Factors related to US tariffs have also gradually cooled down, helping Việt Nam maintain its advantage in attracting FDI. Therefore, FDI and remittances will be two important drivers to help ease the exchange rate pressure in the fourth quarter, Minh said. — BIZHUB/VNS