The USD exchange rate is the ratio between the value of the US Dollar (USD) compared to the currency of another country, showing the value of the USD compared to that country’s currency. Simply put, the USD exchange rate shows how many units of another currency a customer needs to exchange for 1 USD.
The USD exchange rate changes continuously in the foreign exchange market and is determined based on many factors, here are some of the main factors:
Economic and political situation: Inflation, GDP, unemployment rate, economic crisis and political events such as war, conflict, in general are unstable factors, seriously affecting the USD exchange rate.
Demand and supply in the market: When the demand for USD is high, the USD price will also increase, and vice versa.
Monetary policy: When central banks such as the US Federal Reserve (Fed) change interest rates, this will also affect the exchange rate.
Why should we monitor USD exchange rate forecasts?
Because exchange rates are closely related to financial and economic aspects of businesses as well as individuals. Monitoring USD price forecasts in the coming time as well as gold price forecasts is very important and necessary. The following are common reasons why we should continuously monitor USD exchange rate forecasts.
Impact on financial and investment activities
For investors, regularly and continuously monitoring USD exchange rate forecasts will help them make appropriate judgments and decisions in investing in the foreign exchange market, real estate or international stocks and bonds.
In addition, fluctuations in USD exchange rates affect the stock prices of companies, especially enterprises with foreign investment factors, or large-scale import and export activities.
Export activities
When the US Dollar increases compared to the Vietnamese Dong, goods exported abroad will have more competitive prices because the cost of the product when calculated in USD is cheaper. On the contrary, when the USD depreciates, exporting enterprises may face great challenges.
Therefore, to protect businesses and organizations from exchange rate fluctuations and manage related risks, investors should ensure to pay attention to forecasting USD prices in the coming time.
Imported goods prices
Essential goods such as metals, fuel, food, oil, etc. are imported in USD. The increase in USD price will increase the transaction price of these items, putting pressure on domestic inflation, profits and people’s lives. Updating the forecast of the upcoming USD exchange rate will help businesses and organizations make timely adjustments.
Impact on studying abroad and tourism
When the US dollar price increases, the cost of traveling abroad, especially to countries that use the USD, will also increase. Students studying in the US or countries that use the US dollar will also have to pay more for tuition and living expenses if the US dollar increases and vice versa.
Forecast of USD price in the coming time
In Vietnam, based on information and data released by the Ministry of Industry and Trade, it is forecasted that the USD exchange rate in 2024 will gradually become more stable, with the possibility of the Vietnamese Dong gaining an advantage over the US dollar.
The main reason for this stability is the continuous increase in FDI capital inflows (about 14.15 billion USD, up 8% over the same period last year) along with the recovery of the tourism industry, the number of international visitors to Vietnam increased sharply, reaching 45.8% over the previous year. These two factors have helped support the exchange rate and improve the balance of payments.
Not stopping there, the US Federal Reserve (Fed) starting to cut interest rates and implementing a monetary policy easing cycle in the second half of 2024 will also contribute to the stability of other currencies.
According to the latest research from financial experts at UOB Bank, a leading bank in Singapore, the USD exchange rate in 2024 is forecast to fluctuate around VND 24,500 at the end of 2024 and continue to decrease gradually until reaching VND 23,900 at the end of 2025.
In general, the USD price forecast in the coming time is expected to continue to be stable and not have many significant fluctuations. Despite the great impact of the recent storm Yagi, many financial experts believe that Vietnam’s economy will continue to grow strongly, thanks to trade and production activities.
Benefits of a Stable USD Exchange Rate
When the USD exchange rate is stable and the VND tends to appreciate, it will bring a number of great benefits to the government, businesses and consumers. Here are some of the notable benefits.
Reduced import costs
When the USD price is stable, businesses specializing in importing will be able to buy goods and services from abroad at a better price. This will help reduce input costs, especially for sectors that are significantly dependent on foreign fuel sources.
More specifically, when import costs decrease, product prices will also tend to stabilize or even decrease. Therefore, consumers can buy products at more attractive prices.
Attracting foreign investment
When the VND value is stable and appreciates, international investors and businesses will have reduced exchange rate risks. This increases the attractiveness of Vietnam as a potential investment destination in the eyes of foreign investors.
Not stopping there, a stable exchange rate also means that foreign debts (in USD) will become cheaper (in VND). Businesses, organizations and governments can take this opportunity to pay off debts, helping to reduce financial pressure.
Increase foreign exchange reserves
When the USD exchange rate is stable, the State Bank of Vietnam will increase the purchase of US dollars to accumulate foreign exchange. This helps to increase the ability to stabilize the market and prevent future currency and inflation risks. Contribute to bringing many benefits to the economy, improving people’s purchasing power and keeping commodity prices stable.
Conclusion
Currently in Vietnam, the USD exchange rate is stable and the VND is increasing. This brings many positive effects to the economy such as limiting inflation, attracting foreign investment, supporting international debt repayment and many benefits to consumers.
In short, exchange rates can change continuously based on many different factors. Therefore, forecasting the USD price in the coming time is very important and necessary not only for investors and businesses but also affects many individuals in all aspects of economic life.
