On October 31, the U.S. dollar traded around VND27,672-27,792 on the unofficial market, compared with banks’ selling rate of nearly VND26,137, a difference of roughly VND1,535-1,655 per dollar. The rate climbed further to a new peak of VND27,800-27,850 on November 1.

According to Viet Dragon Securities Corp. (VDSC), the free-market USD has risen sharply since the start of 2025, pushing the spread between the official and unofficial markets to its widest since 2013 - signaling growing supply-demand pressures for foreign currency.

The dollar’s strength has been driven largely by external factors, particularly the U.S. Federal Reserve’s policy stance of keeping interest rates higher for longer, which has boosted the greenback’s appeal and weighed on emerging-market currencies, including the VND.

Rising foreign-currency hoarding and stronger USD demand have also contributed to the volatility. As imports rebound and foreign direct investment (FDI) disbursements slow, households and businesses have turned to USD as a hedge against exchange-rate risk. The wide gap between domestic and global gold prices has further fueled demand for dollars on the parallel market.

While official foreign-exchange channels, including banks and trade-related transactions, remain under control, the higher free-market rate reflects strong off-system demand. The State Bank of Vietnam (SBV) recently sold foreign currency through cancellable forward contracts to stabilize the market, most recently on October 22 with an estimated volume of $1.5 billion.

A narrow or negative interest-rate differential between the dong and the dollar has also reduced the attractiveness of holding VND, encouraging a shift toward USD assets or payments.

FX outlook

Market analyst Matt Simpson said Fed chair Jerome Powell’s dismissal of a possible 25-basis-point rate cut in December surprised investors, as futures had priced in a 90% probability of an easing before Christmas.

Although U.S. data releases have been limited due to a government shutdown, traders will closely watch next week’s ISM report, particularly the “prices paid” and “employment” sub-indexes, for clues about the Fed’s next policy moves and the dollar’s trajectory.

Analysts expect the official USD/VND rate to remain stable or edge up slightly (2-4%) in the coming months, provided no major external shocks occur, supported by the SBV’s foreign-currency reserves and coordinated fiscal-monetary policies.

Standard Chartered in a release last Thursday remains its USD/VND forecast at 26,300 for 2025 and 26,750 for 2026.

Its economists expect the refinancing rate to remain at 4.5% for the rest of 2025 and 2026, with accommodative conditions supporting investment and expansion.