Expert predictions on forex in 2024

January 15, 2024 | 18:45
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Experts forecast a more moderate exchange rate movement in 2024 despite current stormy conditions.

Senior economist Dinh Trong Thinh said that amid strong vulnerabilities in the global financial and monetary markets in 2023, many currencies saw a strong drop in their face value compared to US dollars, and the State Bank of Vietnam (SBV) handled monetary policy, particularly those in forex, proactively and flexibly.

Expert predictions on forex in 2024

The forex rate, therefore, moved in a contained range, albeit at some points of time it experienced strong volatilities aligned with the global market situation.

“The depreciation of about 3 per cent of the VND compared against the USD in 2023 was earlier forecast and under control,” Thinh said.

Pyon Young Hwan, director of Forex Market and Derivatives at Korean-backed Shinhan Vietnam, said that the VND-USD exchange rate might remain relatively high in the first half of this year, driven by negative outside factors, such as dwindling consumer demand, or a weakened Renminbi due to concerns over Chinese economy.

The rate, however, shall gradually relax as central banks in the world’s top economies end their tightening monetary policies and begin to slash interest rates.

The VND-USD exchange rate soothing process might come a bit later compared to the pairs in other emerging countries. On a quarterly basis, the rate might go down gradually from VND24,210 in the first quarter (Q1), to VND23,910 in Q4, with the whole-year average level at VND24,050, according to Shinhan Vietnam’s expert.

British lender Standard Chartered Vietnam assumed that the VND would continue to face many challenges and the exchange rate is forecast to fetch at VND24,000 by the year-end, and forex reserves would rebound amid weakening USD.

Le Anh Tuan, Securities director at Dragon Capital said that it is not a worrying factor if the exchange rate was fluctuating in the +/- 3 to 4 per cent range this year as according to forecasts by many financial and economic experts, the economy would recover slowly in 2024, and with insignificant inflation pressures, monetary policies might continue to be loosened to aid economic recovery.

The fact that the US Federal Reserve shall end the base interest rate hike cycle, even with a proposed rate cut in 2024, is a positive factor to the exchange rate.

In the domestic market, the foreign direct investment flow is expected to maintain growth pace amid a stable investment climate and the challenges related to the application of global minimum tax are tacked.

The remittance inflow is also forecast to champion fair growth and continued trade surplus shall aid exchange rate movement.

Nguyen Duc Lenh, deputy director of SBV’s Ho Chi Minh City Branch revealed that the city received nearly $9 billion in inward remittances in 2023, a 35 per cent jump on-year. Meanwhile, the SBV forecast the inward remittances in Vietnam in 2023 would surge from 25-30 per cent compared to 2022.

This is a crucial factor behind the surplus status of Vietnam’s current balance last year, casting a positive impact on the exchange rate.

Can Van Luc, senior financial expert, predicts that with the possibility the Fed ends their rate hike cycle, the VND-USD exchange rate would inch up from 1.5-2.5 per cent range this year.

Early this month, Central Bank Deputy Governor Dao Minh Tu said that this year, the SBV should continue their flexible management of the exchange rate to ensure the forex market and macroeconomic stability.

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By Vinh Thuy

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