The exchange rate has decreased by more than 300 dong since the new mechanism was implemented.

Currently, each US dollar is selling for around 22,235 VND, 315 VND lower than the first day the State Bank of Vietnam applied the central exchange rate mechanism.

Over the past six trading sessions (from January 25th to 30th), the USD/VND exchange rate at banks has continuously decreased, from 22,390 VND to 22,235 VND per US dollar, a drop of 165 VND. Compared to the rate on the first day the State Bank of Vietnam applied the cross-exchange mechanism for VND with several other foreign currencies, the current rate per USD has decreased by 315 VND – a significant drop unprecedented before.

The USD/VND exchange rate continuously decreased during the first half of 2016.

According to a report by Bao Viet Securities Company (BVSC), the sharp drop in the exchange rate is due to increased supply of USD from investment disbursements and remittances. Many banks are selling foreign currency to balance their foreign exchange positions.

However, BVSC believes that the recent exchange rate fluctuations are only temporary, as the US dollar continues to strengthen in the international market, and the devaluation of the Chinese yuan continues to put pressure on the USD/VND exchange rate.

At a recent global economic presentation in Ho Chi Minh City, many businesses stated that their biggest concern lay in exchange rate fluctuations. However, when Standard Chartered Bank conducted a quick survey in the auditorium, only 8.6% indicated a high level of hedging, while 53.5% of import-export businesses reported low exchange rate risk hedging and nearly 38% said they had a moderate level of hedging.

One business owner was also unsure which exchange rate to choose for budgeting. He explained that in 2015, the company had initially budgeted at 21,500 VND per USD, but by the end of the year the exchange rate had surged to 22,500 VND per USD, resulting in a significant discrepancy.

In response to this concern, Standard Chartered's leadership stated that, with this new exchange rate policy, the Vietnamese dong will face less pressure and will hover around 22,700 dong until the end of the year.

Experts also predict there is still room for exchange rate adjustments. Accordingly, in the first quarter, the USD/VND exchange rate is predicted to be at 22,600 VND, in the second quarter of 2016 at 22,800 VND, and in the third and fourth quarters at 22,700 VND.

According to VNE