Entering Q1 2025, the USD/VND exchange rate recorded significant fluctuations as the USD strengthened broadly. The DXY index rose more than 3% compared to the end of 2024, reflecting expectations that the U.S. Federal Reserve (Fed) will delay its interest rate cut trajectory due to inflation remaining elevated.

In this context, the State Bank of Vietnam (SBV) flexibly managed the central exchange rate while selling a large amount of USD from its foreign exchange reserves to ease pressure on the interbank market. According to estimates, the intervention volume in Q1 reached approximately USD 3-4 billion, equivalent to more than 10% of the current reserve size.

Nevertheless, the listed exchange rate at commercial banks still exceeded VND 25,500/USD, about 2% higher than at the beginning of the year. The gap between the free market exchange rate and the bank rate also widened, reflecting the hoarding sentiment of businesses and individuals.

Experts believe that exchange rate pressure may extend into Q2 as the USD continues to maintain its strength and demand for imported input materials recovers. However, the SBV still has room for intervention given the positive domestic macroeconomic indicators and trade surplus.

Investors should closely monitor the Fed's monetary policy developments as well as signals from the SBV regarding the exchange rate band and open market operations. A strategy of asset diversification, combining holdings of gold and strong foreign currencies, is being recommended to hedge against exchange rate risks in the short term.