US inflation drops sharply, USD plummets, pressure on VND decreases
The USD on the world market suddenly plummeted, reaching its lowest level in the past month after the US announced a rapid decrease in inflation. A weaker USD will help reduce pressure on many currencies in the world, including VND.
On October 11, the US Department of Labor released a report saying that the consumer price index increased by 7.7% in October, down from the previously predicted expectation of 7.9% and down significantly from September's 8.2%. The report said this was the lowest increase in 12 months since January 2022.
The report said that this could be the most important bright spot this month. In addition, the better consumer price index could influence the decision-making process of the US Federal Reserve (Fed) before the FOMC meeting on interest rates in December.
US stock indexes opened higher in New York, while food and energy prices also showed signs of cooling, rising just 0.3% in October, down from a 0.6% increase in September.
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USD decreases, pressure on VND decreases significantly. Photo: Hoang Ha |
The cooling of the US CPI caused the USD index in the markets to also fall sharply. The price of crude oil on the Nymex floor was more stable, trading around 86.75 USD/barrel. The US 10-year bond yield also cooled down, falling to 3.93%, also thanks to the October CPI decrease.
In the world market, the DXY index - measuring the fluctuations of the USD against a basket of 6 major currencies - fell sharply immediately after the announcement of a decrease in US inflation. As of 10:00 p.m. on November 10 (Vietnam time), the DXY was down to 108.83 points, down 1.54% compared to the previous session.
The cooling of the USD has significantly reduced pressure on other currencies in the world, including Vietnam's VND.
In the trading session on November 10, for the first time since mid-January 2022, the State Bank of Vietnam (SBV) reduced the USD selling price at the SBV Transaction Office, from VND 24,870/USD to VND 24,860/USD.
This is a policy signal that the State Bank is willing to sell USD (at a lower price) to the market, as the tension that has lasted since early October seems to have passed.
During the previous 10 months, the SBV only increased or kept the USD selling price unchanged at the SBV Exchange. The increase was adjusted from 23,050 VND/USD on January 19 to 23,400 VND/USD at the end of August, to 23,700 VND/USD on September 6, and 23,925 VND on September 30, 24,380 VND/USD on October 17 before peaking at 24,870 VND/USD from October 24 to November 9.
Over the past week, the State Bank has also tended to lower the central USD/VND exchange rate, from 23,693 on November 4 to 23,686 on November 10.
