Vietnam’s investment landscape remains resilient yet cautious, as external pressures and uncertainties surrounding U.S. monetary policy influence market sentiment. Amid fluctuations in exchange rates and shifting global financial conditions, investors are eyeing opportunities while navigating challenges posed by international developments.
Vietnam’s Economic Outlook
Singapore-based United Overseas Bank (UOB) has forecasted a 6.6% expansion for Vietnam’s economy in 2025, following a projected growth rate of 6.4% for 2024. According to UOB’s recent report, Vietnam’s economic trajectory remains robust, but the depreciation pressure on the Vietnamese đồng (VND) is a concern.
“With the forecast of global trade tensions continuing to increase and the strength of the USD, which is a growing concern, the State Bank of Vietnam is expected to pay attention to the depreciation pressure on the VND. Therefore, we expect the main refinancing rate to remain at 4.5%,” the report noted.
Despite recording its largest quarterly gain in 30 years during Q3 2024, the VND faced significant reversals in October and November, driven by external factors like a recovering USD and recalibrated expectations for U.S. Federal Reserve policies.
Exchange Rate Challenges
Tran Hoang Son, Market Strategy Director at VPBank Securities, highlighted the impact of exchange rate volatility on foreign investor sentiment in Vietnam’s stock market.
“The tense exchange rate could cause foreign investors to increase net selling in the Vietnamese stock market,” Son said. He suggested that market stabilization might come as the Federal Reserve continues to lower interest rates, potentially cooling the strength of the USD.
Meanwhile, Ho Quoc Tuan, Senior Lecturer at the University of Bristol, pointed to macroeconomic stability in Vietnam, despite external pressures. “When interest rates in the U.S. increase, international capital flows tend to shift to markets with more attractive interest rates, which creates pressure on other markets, including Vietnam,” Tuan explained.
Investment Opportunities on the Horizon
Looking ahead, Le Duc Khanh, Analysis Director at VPS Securities, expressed optimism for 2025, citing improvements in macroeconomic conditions, a recovery in foreign investment, and increased public spending by the government.
“2024 was a difficult period for the stock market, but it still increased by 11.7%. In 2025, the market may be better because of factors such as improved macroeconomics, foreign investment recovery, and the government’s promotion of public investment. With those foundations, the stock market can surpass 1,300 and move towards beating 1,400 points,” Khanh said.
As Vietnam’s investment activity adapts to evolving global financial conditions, the country’s economic fundamentals and strategic policy decisions are set to play a critical role in shaping its market performance in the coming year.
