Possibility of the Fed raising interest rates again
USD exchange rate today 7.9 diễn biến trái chiều between the central exchange rate and the USD price at commercial banks.
On the morning of September 7, the State Bank announced the central exchange rate at 25,611 VND/USD, an increase of 6 VND compared to the previous session. With an amplitude of +/-5%, the ceiling level that banks are allowed to trade is 26,892 VND/USD.
At Vietcombank, the USD buying and transfer price on September 7 was at 25,875 VND/USD and the selling price was 26,255 VND/USD, both down 30 VND compared to the end of last week. In the international market, the USD Index (DXY) fluctuated around 99 points.
Although the domestic USD price is cooling down, a new variable that may affect the exchange rate in the coming weeks is the possibility that the US Federal Reserve (Fed) will raise interest rates right in September.
In the Weekly Market View report released on September 4, Standard Chartered said the probability of the Fed raising interest rates in September has risen to over 50%.
The bank believes that the possibility of interest rate hikes will be strengthened 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.
Two conditions on the labor market have somewhat appeared.
According to the US Bureau of Labor Statistics (BLS), the US economy created 162,000 non-farm jobs in August, while the unemployment rate remained at 4.1%.
After the jobs report, CME Group said CME FedWatch valued about 58% of the Fed's ability to raise interest rates by another 25 basis points in September.
US inflation data therefore becomes the next piece before the Fed makes policy decisions.
In the Weekly Market View report on September 4, Standard Chartered said that even in the event that the Fed implements a defensive interest rate hike, the room for a prolonged upward cycle remains limited. Inflation pressure is expected to gradually decrease in the coming year as the impact of tariffs and high oil prices weaken.
This means that the possibility of the Fed raising interest rates may support the USD in the short term, but it is not enough to confirm that the greenback will enter a prolonged upward cycle.
USD exchange rate forecast at the end of the year
Previously, Standard Chartered in an update on August 28 lowered its DXY forecast for three months to 98 points, from 101.5 points previously. In 12 months, this bank expects DXY to fall to about 96 points.
According to Standard Chartered, the medium-term outlook for the USD is affected as the interest rate difference between the US and other economies may narrow. US fiscal and foreign balance issues are also seen as factors putting pressure on the greenback.
Regarding the USD/VND exchange rate alone, UOB Global Economics & Markets Research in its report on August 4 forecasts that the exchange rate may rise to about 26,500 VND/USD by the end of Q3/2026, then decrease to 26,400 VND/USD by the end of Q4.
In 2027, UOB forecasts USD/VND at around 26,300 VND at the end of Q1 and 26,100 VND at the end of Q2.
Along with that, UOB forecasts DXY at 100.9 points in Q3/2026, down to 99.2 points at the end of the year, 97.9 points in Q1/2027 and 96.9 points at the end of Q2/2027.
However, this UOB report was built from the beginning of August, before the possibility of the Fed raising interest rates in September was market-valued higher.
Even in the report, UOB also identified one of the risks for the USD weakening scenario as the Fed implementing interest rate hikes that the market is expecting. Prolonged high oil prices could also put pressure on Asian currencies.
The 26.400 VND/USD mark at the end of the year is still UOB's forecast, but the Fed's decision in September may become a factor that changes the exchange rate outlook.
Compared to the USD selling price at Vietcombank on the morning of September 7 at 26,255 VND, UOB's year-end forecast level is not too far from the current level. The diễn biến of the USD/VND exchange rate in the remaining months will therefore depend significantly on US inflation data, Fed policy and international capital flows.
