The reference rate set by the State Bank of Vietnam (SBV) has remained mostly stable this year and was at VND23,205 Tuesday.

Rates at commercial banks for the last two months have also been stable. Vietcombank was selling the dollar for VND23,270 Tuesday morning.

Ngo Dang Khoa, head of global markets at HSBC Vietnam, said that the VND/USD exchange rate will remain stable for the last four months thanks to a weakened dollar, Vietnam’s record-high trade surplus in the first eight months, and the record-high currency exchange reserves of the SBV.

A Reuters poll of 75 foreign exchange strategists showed that 45 of them, or 60 percent, said the dollar would weaken slightly over the coming year.

Analysts said the U.S. Federal Reserve’s policies have been the main reason for dollar weakening sharply over the last four or five months. The Fed announced last week that it would tolerate periods of higher inflation and focus on employment.

"So they’ve basically slashed rates to zero, that yield differential in America over the rest of the world is compressed and that obviously helped keep the dollar at such strong levels in previous years, which is no longer the case," Reuters quoted currency economist Lee Hardman as saying.

Vietnam’s trade surplus climbed to a new peak of $11.9 billion in the first eight months as imports declined due to the fallout of the novel coronavirus pandemic, according to the General Statistics Office. A trade surplus increases the country’s supply of foreign currency.

Prime Minister Nguyen Xuan Phuc on September 4 said that Vietnam’s foreign exchange reserves was at nearly $92 billion and could reach $100 billion by the end of the year.

However, analysts from brokerage Bao Viet Securities said the SBV could slightly weaken the dong in the upcoming months amid the U.S. watching several countries, including Vietnam, for currency manipulation, or the use of unfair currency practices to gain trade advantages.

A Vietnamese currency expert who asked not to be identified said that although Vietnam’s currency reserves have been increasing, it was still lower than other countries.

The government has also been working closely with American authorities to prove that Vietnam is not intentionally using currency as a tool to boost exports, he added.

Vietnamese authorities have repeatedly affirmed that the country does not use monetary policies to unfairly compete with trading partners.