Connect with us

Project

USD/VND gap fuels ongoing exchange rate pressure

Published

on

Exchange rate alterations are expected to remain complex for the rest of 2025. Associate director of Rates Trading at HSBC Vietnam Vu Binh Minh spoke with VIR’s Hong Dung about possible US Federal Reserve plans and resulting exchange rate pressures.

The VND hit a record low of 25,600 per USD in March after the State Bank of Vietnam (SBV) raised its USD selling price to 25,698, marking its first adjustment since October 2024. How do you assess this?

USD/VND gap fuels ongoing exchange rate pressure
Vu Binh Minh

Since the Lunar New Year in early February, the SBV has gradually raised the central exchange rate in consecutive sessions, exceeding 24,800 VND/USD in the past couple of days.

In the year-to-date, the central rate has risen by VND471, equivalent to a 1.9 per cent increase, marking a significant adjustment compared to the same period in previous years. The continuous upward trend in the central rate has also pushed the ceiling rate higher accordingly.

In addition, in mid-February, the SBV shifted its USD intervention mechanism from a fixed selling rate of 25,450 VND/USD to a floating mechanism, keeping the rate at VND50 below the ceiling. Combined with persistently low VND interest rates in the interbank market, this pushed USD/VND higher to 25,600 in early March, coinciding with when the US Dollar Index (DXY) rebounded past the 107 level.

However, given greater flexibility in exchange rate policy management, which created more room for exchange rate movement, USD/VND witnessed two-way fluctuation. By mid-March, it cooled down to 25,450-25,550 in the interbank market as the DXY declined, coupled with a more balanced USD supply versus demand.

Exchange rate developments have also become more complicated this year in the context of Vietnam’s open economy, along with external factors such as developed countries’ policy shifts affecting USD volatility and geopolitical risks, as well as trade balance and foreign investment.

What is HSBC’s exchange rate forecast for 2025?

Asian currencies, including VND, have not benefited much from the recent decline in the DXY, as concerns over US tariff policies persist, alongside weak investment appetite globally, and slowing growth conditions domestically.

On the other hand, headlines of Europe’s increased fiscal spending and increased defence spending may offer some positive spillover effects for countries in the region. However, at this stage, these impacts are expected to be relatively limited and unlikely to offset potential losses stemming from US policy measures.

Vietnam may face the highest tariff risk in ASEAN, given its trade surplus with the US reaching $123 billion in 2024. As a result, exchange rate pressures remain a key concern. HSBC Global Research maintains its forecast for the USD/VND exchange rate to reach 25,600 by the end of Q1 and 25,800 by year-end.

What factors could help ease depreciation pressure on the VND?

Several scenarios suggest that the DXY might be able to soften further in the near term, driven by signs of weakening US data, escalating trade tensions, and the resurgence of the European economy, all of which could help alleviate depreciation pressures on VND.

However, it remains too early to confirm a clear trend for the DXY at this moment, and the likelihood of its appreciation over the medium to long term remains significant.

For the USD to weaken sustainably, key conditions must align, including Europe and China’s economies improving, US growth struggles, pressure on the US Fed to cut faster, and tariffs proving benign. Yet, current US data shows no signs of an abrupt downturn.

Domestically, Vietnam continues to leverage its strengths, supporting investors through admin reforms and enhanced incentives in taxation and fees. Expanding trade partnerships beyond the US is also crucial. Vietnam recently elevated official ties with Singapore and Indonesia, expected to boost foreign investment inflows, enhance USD liquidity, and ease VND depreciation pressure.

In addition, the government’s visa liberalisation efforts are further driving retail consumption and foreign currency inflows. Meanwhile, inflation cooled in February, and with the National Assembly raising its target to 4.5-5 per cent, policymakers now have more flexibility to manage exchange rate pressures.

With interest rates being kept low, how do you think this impacts the exchange rate?

With Vietnam setting an economic growth target of at least 8 per cent for this year, policy measures have been directed towards maintaining liquidity stability and facilitating credit expansion. In practice, banks have been actively lowering deposit rates to create room for further reductions in lending rates.

Since March 5, the SBV has re-introduced 35-day and 91-day reverse repo transactions in the open market operation, alongside the existing 7-day term at an unchanged interest rate, to provide long-term liquidity support to the interbank system.

However, with the Fed yet to implement a clear path to further rate cuts, the currently wide interest rate differential between the USD and VND continues to exert pressure on the domestic exchange rate.

By flexibly utilising its monetary policy tools and proactively allowing room for exchange rate movements, the SBV has kept USD/VND fluctuations within a relatively narrow range, particularly in comparison to other regional currencies.

With businesses and investors closely watching exchange rates, what guidance would you offer to help them navigate the market?

The VND remains vulnerable to external factors such as the Fed’s interest rate policies, fluctuations in the DXY index, and tariff measures.

On the upside, if the Fed accelerates rate cuts, global economic growth outside the US improves as geopolitical conflicts subside, and investment capital returns to the market, particularly with the prospect of Vietnam’s stock market upgrade, these pressures could be balanced.

Perhaps the word “uncertainty” best describes the current trends and investor sentiment. To ensure optimal cash flow management and mitigate market risks, businesses should develop effective hedging strategies by utilising exchange rate and interest rate risk management tools.

Additionally, incorporating various exchange rate and interest rate scenarios, along with policy direction, into business and investment planning will be crucial in navigating this volatile environment.

Project

Vietnam’s Exclusive Economic Zone boasts over 1,000 GW of wind power potential: report

Published

on

Vietnam’s Exclusive Economic Zone (EEZ) has a wind power potential of 1,068 GW, nearly 470 GW more than previously estimated, according to a report released Friday by the National Center for Hydro-Meteorological Forecasting (NCHMF).

An offshore wind power project in Vietnam. Photo courtesy of VnEconomy.

An offshore wind power project in Vietnam. Photo courtesy of VnEconomy.

The report, titled “Detailed Assessment of Wind Resource Potential in Coastal (up to 6 Nautical Miles) and Offshore Areas in Vietnam,” was conducted by the NCHMF with support from the United Nations Development Program (UNDP) and the Norwegian Embassy.

This wind potential was measured at a height of 100 meters above sea level, said Mai Van Khiem, director of the NCHMF. He noted that from November to February each year, wind capacity accounts for half of the annual total – peaking in December and gradually decreasing, with the lowest levels recorded in May.

The southern offshore areas account for 894 GW of this potential, while the northern areas contribute 174 GW.

In nearshore zones (up to 6 nautical miles), the total technical wind power potential is 57.8 GW. The Bac Lieu-Ca Mau region alone contributes nearly 30% of this, while the Ninh Thuan-Binh Thuan area accounts for 24 GW. Although the Quang Tri-Hue region has lower potential, it offers stable wind speeds during the winter months. The Red River Delta has a modest potential of 0.17 GW.

Compared to previous assessments, such as the World Bank’s 2021 study and data from the Global Wind Atlas (GWA), this report provides more detailed and higher-resolution information, both spatially and temporally.

“Notably, the EEZ potential outlined in this report exceeds the World Bank’s estimate by 469 GW, primarily due to the broader scope of the survey and more refined climate modeling using domestic observational data,” the research team explained.

They also emphasized the use of the Weather Research and Forecasting (WRF) model customized specifically for Vietnam, which enhanced the accuracy of the results.

The findings are based on wind data collected from 26 coastal and island meteorological stations, satellite sources from CCMP, ASCAT, and SCATSAT-1 (covering 30 years of ocean surface wind data), as well as buoy data from Nghe An province and seabed depth measurements.

A key innovation in this report is the integration of potential impacts from extreme weather events. Typhoons and tropical depressions occurring between August and October pose structural and safety risks to wind turbines. Meanwhile, strong winds and high waves during the northeast monsoon season can hinder access to and maintenance of offshore wind systems.

To support model calibration and long-term observation, the research team recommends increased investment in offshore wind monitoring stations at heights exceeding 100 meters. They also suggest incorporating these findings into offshore wind development strategies and national marine spatial planning.

Additionally, the team advocates for expanding research into other forms of marine renewable energy, such as wave, tidal, and ocean thermal energy.

“Vietnam has some of the most promising offshore wind resources in the region, creating a strong foundation for the development of a large-scale offshore wind industry. This will contribute to energy security, green economic growth, and the achievement of net zero commitments,” they said.

The study provides a vital scientific basis for policy planning, identifying priority development zones, attracting investment, building infrastructure, and training the future offshore wind workforce, the team added.

Hoang Duc Cuong, deputy director of the Department of Meteorology and Hydrology, emphasized that Vietnam lies within a strong and stable Asian monsoon belt, giving it abundant wind energy potential. He noted that this renewable source will play a key role in meeting the country’s climate change goals and advancing a low-carbon economy.

However, he also warned that marine-based natural disasters are highly complex and could significantly impact the stability of offshore wind operations and energy generation.

Continue Reading

Project

Uncertainty weighing on real estate

Published

on

The ever-changing status of the global economy following last week’s tariff shocks continue to loom large among investors in Vietnam’s real estate market.

Uncertainty weighing on real estate
All real estate segments are at risk of losing appeal if high global tariffs are eventually put in place, photo Le Toan

Pham Lam, vice chairman of the Vietnam Real Estate Association, said that while it is premature to determine the full impact of new US import tariffs on Vietnam’s property market, early signs point to shaken investor sentiment and potential disruptions to foreign investment.

“If multinational corporations scale back or delay their factory expansion plans, the demand for land and factory leasing could decline, which may place downward pressure on industrial rents, lead to increased vacancy, and postpone new industrial zone developments,” he said. “This would affect key industrial property markets such as Bac Ninh, Bac Giang, Haiphong, Long An, and Binh Duong.”

Meanwhile, real estate expert Nguyen Hoang said that the United States remains one of the most critical export destinations for Vietnam’s foreign-invested enterprises.

“Any change in tariffs will significantly influence capital flows, investor confidence, and manufacturing strategies of companies operating in Vietnam. If a high tariff is fully implemented in 90 days, it could seriously diminish Vietnam’s investment appeal – affecting all real estate segments as a result,” Hoang said.

Vietnam’s property market has only recently emerged from a prolonged two-year downturn.

“It remains highly sensitive to economic and policy shocks. Investors have remained cautious, and any further external pressure could threaten to break the fragile liquidity recovery, potentially sending the market back into a period of short-term stagnation,” Hoang added.

Alex Crane, managing director of Knight Frank Vietnam, said that the recent tariff twists by the US casts a shadow of uncertainty, with potential implications for various segments of the market.

While manufacturing has shown resilience, it is still on the path to full recovery from the pandemic, particularly in labour-intensive sectors like garments and furniture. Tariffs imposed now would not have as severe an impact as they might have during Vietnam’s 2019 peak, but consequences are still expected, Crane said.

“I may expect that major transactions, especially those involving large capital outlays, are being paused or undergoing extended due diligence as investors and developers reassess assumptions and underwriting models and commercial occupiers are expected to defer large capital expenditures in the short term,” Crane said.

In addition, the response from the State Bank of Vietnam, particularly regarding monetary policy, will be crucial. While a rate cut may not effectively stimulate residential demand (as demonstrated in 2024), targeted lending for key industries and easing of loan-to-value ratios or debt-to-income limits for developers could provide relief.

“At present, most segments of the real estate market are in a holding pattern, awaiting clarity from the evolving negotiations between the Vietnamese and US governments. While uncertainty is unsettling, Vietnam’s underlying fundamentals remain sound, and the market’s long-term outlook is still viewed positively,” he added.

Nguyen Dung Minh, deputy CEO of MIK Group, has warned that under the new US tariff regime, many investors will be forced to reassess their strategies, likely leading to a decline in the demand for industrial land.

“Investors will need time to re-evaluate their actual demand and incoming orders and make necessary adjustments before they can fully gauge the extent of the impact,” Minh said.

He added that the implications go beyond just industrial land. “The new US tariffs are also expected to disrupt supply chains and negatively affect supporting sectors such as logistics, warehousing, and raw materials manufacturing. As production slows, so too will the demand for land associated with these services,” Minh said.

Trang Bui, country head Cushman & Wakefield Vietnam

While the effects of tariffs are typically delayed, most economists warn that they may eventually fuel inflation and dampen economic growth. Many manufacturing firms could opt to postpone their expansion plans in the short term if export duties become too burdensome. There is also a possibility that some companies may look to diversify their supply chains towards a Vietnam+1 model, shifting parts of their operations to neighbouring countries.

This could lead to a decline in demand for factories and warehouse leasing, two key drivers of the industrial real estate segment. However, it is important to recognise that industrial real estate is fundamentally a long-term investment. Vietnam has long positioned itself as the manufacturing hub of Southeast Asia, thanks to its strategic location and the “bamboo diplomacy” approach, which has enabled the country to swiftly join trade negotiations and sign multiple free trade agreements.

Moreover, many manufacturers in Vietnam have already established tightly integrated supply chains. As such, their investment plans tend to operate on a much longer time horizon than the near-term effects of tariff policy. Relocating supply chains typically requires at least 3–5 years, making short-term shifts less likely.

Overall, Vietnam’s industrial real estate sector has proven resilient under various political and economic conditions. Investors would do well to focus on long-term trends and structural advantages. Manufacturers, in particular, may take this opportunity to secure high-quality industrial assets, invest in automation, and pull in skilled labour, while continuing to monitor developments in upcoming trade negotiations with caution.

Nguyen Thi Bich Ngoc, CEO, Sen Vang Group

When it comes to the reciprocal tariff policy announced by the US, the greater danger currently lies not in the tariff itself, but in the heightened sense of uncertainty it has triggered across the Vietnamese market, a sentiment clearly reflected in recent VN-Index fluctuations.

In the short term, the policy will weigh heavily on Vietnam’s industrial real estate sector. However, in the long run, this challenge could serve as a catalyst for stronger growth. It presents an opportunity for the government and industrial zone developers to rethink their strategies, offering more competitive, attractive solutions to both foreign and domestic investors.

Rather than relying solely on external trends like the China+1 shift, Vietnam should leverage its inherent competitive advantages, including a strategic geographic location, a skilled and cost-effective labour force, and political stability, to pull in long-term investment. These are undeniable strengths that set Vietnam apart.

Moreover, this is also an opportune moment for Vietnam to re-evaluate and restructure its key sectors, prioritising strategic industries with high growth potential. Continued engagement in bilateral and multilateral trade agreements will open up new opportunities and elevate Vietnam’s position both regionally and globally.

Ultimately, we must seize this challenge as a turning point, transforming pressure into momentum for sustainable development.

Vo Hong Thang, Investment director DKRA Group

The industrial infrastructure, commercial, and residential real estate segments are all likely to face increasing headwinds if a huge tariff increase is eventually implemented.

In recent years, a number of developers have made significant investments in industrial zones, betting on a continued influx of foreign direct investment. However, the new tariff policy raises the possibility of such flows being diverted to other countries. Vietnam now faces the risk of having built the nest, but being unable to attract the eagle.

In addition, liquidity in both residential and commercial real estate, including retail, office, and hospitality, is likely to weaken in the short term due to more cautious investor sentiment, defensive capital flows, and reduced purchasing power from end-users.

Niche investment segments such as serviced apartments, tourism-related accommodations, and foreign buyer housing could also see demand drop, particularly as the foreign expert and executive workforce, typically a key demand driver, scales back plans to live and work in Vietnam.

Continue Reading

Project

Central Vietnam city seeks $1.84 bln for 15 projects in economic zone

Published

on

Authorities of Hue city in central Vietnam have released a list of 15 projects in Chan May-Lang Co Economic Zone which will need VND47.5 trillion ($1.84 billion) in investment capital between 2025 and 2026.

Chan May-Lang Co Economic Zone in Hue city, central Vietnam. Photo by The Investor/Dinh Duy.

Chan May-Lang Co Economic Zone in Hue city, central Vietnam. Photo by The Investor/Dinh Duy.

Notable projects include the Chan May non-tariff zones No. 1 and 2 infrastructure development project, with a total area of over 503 hectares and combined investment capital of VND2.8 trillion ($108.23 million).

Another is the VND20 trillion ($773 million) Chan May Urban Area project (locations 1 and 2), which will cover 225 hectares and be implemented over five years.

The LNG terminal project at Chan May Port, 27 hectares with an investment of VND8.6 trillion ($332.43 million), is set for five-year implementation.

The 120-hectare Bai Ca eco-tourism project in Lang Co township will have investment capital of VND2.5 trillion.

The Lang Co beach resort, with an area of 45 hectares and total investment of VND4 trillion ($154.62 million), will be carried out over five years; while the 75-hectare Lap An lagoon tourism, urban development and resort complex in Lang Co township will cost VND6 trillion.

According to the management board of Hue Economic and Industrial Zones, since its establishment, Chan May-Lang Co Economic Zone has attracted 55 investment projects which remain valid, with total registered capital of VND97.32 trillion ($3.76 billion).

Among these, 15 are foreign-invested projects with combined capital of VND56.02 trillion ($2.17 billion), accounting for 57.56% of the total.

Several prominent foreign investors have established a presence in the zone, such as Banyan Tree Group (Singapore) with the Laguna Lang Co Resort and Winson Group (Taiwan) with the Billion Max Vietnam Export Processing Factory.

Chan May-Lang Co has become a destination for investments in sectors like tourism and resort development; seaport infrastructure; logistics; clean industry; and high-tech, environmentally friendly industries, with annual revenue reaching nearly VND4 trillion ($154.62 million) and tax contributions of around VND300 billion.

The management board said Hue city has proposed the Ministry of Construction review the adjustment of the EZ master plan through 2045, for submission to the Prime Minister.

The strategic goal is to develop Chan May-Lang Co into a key economic zone of central Vietnam – a coastal gateway offering logistics services for the central region and the East-West Economic Corridor, as well as a hub for high-end tourism services.

To attract investors, the local government will offer a range of incentives such as a 10% corporate income tax rate for 15 years from the first year the project generates revenue; import tax exemption for goods to create fixed assets for investment projects, and land and water surface rental exemptions, the board said.

Continue Reading

Trending