Fed Interest Rate Hike Threatens USD Year-End Forecast
The USD exchange rate has seen a decrease in recent days, but its year-end forecast is facing a challenge from the US Federal Reserve's potential interest rate hike.
The central exchange rate announced by the State Bank on September 7 was 25,611 VND/USD, an increase of 6 VND compared to the previous session. The ceiling level that banks are allowed to trade at is 26,892 VND/USD, with a +/-5% amplitude.
At Vietcombank, the USD buying and transfer price on September 7 was at 25,875 VND/USD, while the selling price was 26,255 VND/USD, both down 30 VND compared to the end of last week. In contrast, the international market saw the USD Index (DXY) fluctuate around 99 points.
The possibility of the Fed raising interest rates in September has increased to over 50%, according to Standard Chartered's Weekly Market View report released on September 4. The bank believes that a hike is more likely if non-farm work in August continues to increase, the unemployment rate remains around 4.1%, and core inflation increases by at least 0.2% compared to the previous month.
The US economy created 162,000 non-farm jobs in August, while the unemployment rate remained at 4.1%. CME Group reported that about 58% of the Fed's ability to raise interest rates by another 25 basis points in September is valued.
US inflation data will be crucial in determining the Fed's policy decisions. Standard Chartered expects that even if the Fed implements a defensive interest rate hike, the room for a prolonged upward cycle remains limited. Inflation pressure is expected to decrease gradually in the coming year as the impact of tariffs and high oil prices weakens.