"We continued to be negative on the VND, which stayed close to its record low of 26,436/USD reached in August, as the State Bank of Vietnam (SBV) continued to guide the currency weaker through its daily fixings," wrote UOB in a release on Monday.

Given the limited correlation between USD/VND and the broader DXY, the bank said it expects the VND to lag regional peers in benefiting from renewed USD softness, which is likely to emerge as the Fed proceeds with further rate cuts.

US dollars counted at a bank in Vietnam. Photo courtesy of Bac Hoa Xanh (Green Grocery).

The VND remained the second worst performing Asian currency in the first nine months of 2025, declining by 3.55% against the USD, ahead of Indian rupee’s 3.58% fall and trailing marginally behind Indonesia rupiah’s 3.38% drop.

In contrast, regional peers benefitted from a broad USD weakness backdrop, with gains ranging from 7.65% for the TWD to 2.5% for the CNH during this period.

With a robust economic performance in the first 9 months of the year and no signs of slowing in momentum, there is little room for the SBV - the country's central bank - to ease policy at the moment.

Meanwhile, inflation pressures remain present, with inflation rate of 3.38% year-on-year in September from 3.24% in August. Inflation rate year-to-date averaged 3.3% (overall) and 3.2% (core), with the latter outpacing the rate in 2024 (2.9%) and 2023 (3%).

The SBV set the daily reference exchange rate at 25,106 VND/USD on Monday, up VND3 from last Friday.

With the current trading band of +/- 5%, the ceiling rate applicable for commercial banks during the day is VND26,361 per USD, and the floor rate VND23,851/USD.

At 4 p.m. Monday, the buying rate at Vietcombank was VND26,101/USD and the selling rate VND26,361, up VND17 and down VND3 from last Friday, respectively.

At Vietinbank, the buying and selling rates were VND26,099 and VND26,361, up VND139 and up VND3, respectively.

For SeABank, the respective figures were VND26,116 and VND26,361, up VND2 and down VND3 from last Friday.

Vietcombank and Vietinbank are state-controlled banks and among the Top 4 Vietnamese banks, while SeABank is a private bank. The above figures refer to payments via bank transfer, instead of cash.

At a conference of Military Bank (MBBank) last Friday, Pham Nhu Anh, CEO of the military-run bank, said that the Vietnamese dong has already weakened 3.5% by October - or about 6% compared to the period last year - leaving little room for maneuver.

"The exchange rate has already reached the upper limit of the central bank’s tolerance band. The full-year target for VND depreciation is 3-5%, and there’s almost no room left to use this policy tool," he argued.

Also at the MBBank conference, Sacha Dray, lead economist at the World Bank in Vietnam, noted that the Vietnamese dong has been under pressure due to widening interest rate differentials between Vietnam and major economies such as the U.S., prompting capital outflows from emerging markets.

He said the SBV has worked to maintain exchange rate stability within the permissible band to stabilize, but this has come at the cost of lower foreign reserves.

Vietnam’s monetary policy remains appropriately accommodative to support growth, but there is limited room for further easing as inflation risks may rise, Dray said.

He recommended that the country maintain a “safety buffer” by strengthening foreign reserves and allowing more exchange rate flexibility to absorb external shocks - an approach that proved effective during the trade tensions of 2018.

Vietnam GDP forecast revised up to 7.7%

UOB said the bank is keeping its Q4/2025 growth projection of 7.2% year-on-year, which implies an upward adjustment to its full-year growth forecast of 7.7% from the previous projection of 7.5%.

Standard Chartered late last month raised its Vietnam GDP growth forecast to 7.5% for 2025 from the previous 6.1%, and to 7.2% for 2026 from 6.2%, following HSBC's revising up its prediction to 7.9% (from 6.6%) and 6.7% (from 5.8%), respectively.

"With an expansion of 7.85% year-on-year achieved in Q1-Q3/2025, outlook remains positive for 2025. With a high base in Q4/2024, we anticipate the final quarter would be a challenge given a backdrop of tariffs and trade frictions," the bank wrote.

Vietnam’s real GDP surged by 8.23% year-on-year in Q3, supported by strong exports performance and production despite U.S. tariff.

This is a further extension of the 8.19% pace in Q2 and UOB's call of 7.6%. In the first nine months of 2025, Vietnam’s economy expanded 7.85%.

Vietnam’s outsized performance in Jan-Sep period was largely driven by exports which surged 16% year-on-year with exports to the U.S. registering 27.7% increase, amid a backdrop of tariff rates being imposed.

Manufacturing production saw broad-based increase in the same period, increasing 10.8% year-on-year.

"It would be even more daunting to achieve the official 8.3-8.5% growth projection, which would require Q4 expansion of 9.7-10.5% year-on-year," UOB said.

The government set the country's economic expansion target at 8.3-8.5% for 2025.

Outlook – Delayed impact from US tariffs?

On the tariff front, the relief is that Trump had declared on July 2 a 20% tariff on Vietnam’s imports to the U.S., with a 40% tariff on transshipments, UOB wrote.

While significant, this is well below the initial 46% tariff rate announced on April 2 (reciprocal tariff). Tariff uncertainty eased in H2/2025 after the US finalized country-specific rates before the August 1 deadline.

While lower than the initial 46% threat, concerns remain. The 40% transshipment tariff lacks detail and no further information has been provided to determine how transshipment is defined.

Sector-specific rates on furniture had been announced although no specific details have been given either. Nonetheless, furniture (HS 94) accounted for about 10% of U.S. imports from Vietnam in 2024 which would be another area of concern as tariff impact bites further.

To recap, Vietnam is particularly vulnerable to trade frictions such as U.S. tariffs, due to the open nature of its economy: exports of goods and services account for 83% of Vietnam’s GDP, the second highest in ASEAN after Singapore (182%), as well as its outsized exposure to the US market.

The U.S. accounted for 30% share of Vietnam's exports of $406 billion in 2024 and was its largest market, followed by China (15%) and South Korea (6%).

The major products sold to the US in 2024 include electrical products HS85 ($41.7 billion), mobile phones and related items HS84 ($28.8 billion), furniture HS94 ($13.2 billion), footwear HS64 ($8.8 billion), apparel knitted HS61 ($8.2 billion), and apparel nonknitted HS62 ($6.6 billion). Products from these sectors accounted for nearly 80% of the shipments that Vietnam sent to the U.S. in 2024.

While Vietnam’s trade activities appeared to be robust so far despite U.S. tariffs, one potential outcome is that exports orders could start to fade once the frontloading of orders ease and higher prices affect US consumer demand especially into 2026.

"With an expansion of 7.85% year-on-year achieved in Q1-Q3/2025, outlook remains positive for 2025. However, due to a high base in Q4/2024, we anticipate the final quarter would be a challenge given a backdrop of tariffs and trade frictions.

"As such, we are keeping our Q4/2025 growth projection of 7.2%, which implies an upward adjustment to our full-year growth forecast of 7.7% (from our previous projection of 7.5%). It would be even more daunting to achieve the official 8.3-8.5% projection, which would require Q4/2025 expansion of 9.7-10.5% year-on-year.