Rupee Strengthens Beyond 85/USD as Weaker Dollar and Yuan Gains Buoy Asian Currencies

Economic

Forex

Summary:

The Indian rupee climbed past the 85 per dollar level for the first time in two weeks, supported by a weakening U.S. dollar and rising Chinese yuan, as market sentiment shifts on Trump’s tariff delay and fiscal concerns in the U.S...

Rupee Rises as Dollar Sentiment Sours

The Indian rupee appreciated sharply on Monday, crossing the 85/USD threshold for the first time since early May and settling at 84.82, up 0.4% intraday. The gain extends Friday’s 0.9% surge and aligns with a broader rally in Asian currencies, driven by shifting expectations surrounding U.S. economic policy and foreign exchange dynamics.

This renewed strength came as the dollar index dropped to a one-month low of 98.8, down 0.3% for the day. The decline was sparked by U.S. President Donald Trump’s unexpected decision to delay the imposition of 50% tariffs on European Union goods until July 9—an abrupt turn that revived concerns about trade policy volatility and U.S. fiscal discipline.

Stronger Yuan Adds Momentum to Asian FX Rally

The Indian rupee was not alone in its ascent. The Chinese yuan reached a seven-month high, further supporting regional currency gains. While many Asian currencies have rallied by up to 7% this quarter, the rupee had been an underperformer—still down 0.3% month-to-date before Monday’s recovery. The yuan’s momentum served as a tailwind for the rupee, strengthening investor confidence across emerging market assets.

MUFG Bank noted that financial markets are beginning to interpret U.S. trade policy shifts as indirectly signaling support for a weaker dollar, particularly against Asian currencies. The perception that the Trump administration may welcome local currency appreciation in Asia to rebalance trade relationships is fueling further FX positioning.

Forward Premiums Decline Amid Rally and Yield Dynamics

In the derivatives space, dollar-rupee forward premiums fell in response to the rupee’s strength. The 1-year implied yield dropped below 2%—to 1.99%—for the first time in two months. This suggests a combination of bullish rupee sentiment and rising short-tenor U.S. bond yields, which have narrowed interest rate differentials.

Uncertainty over the Federal Reserve’s next moves continues to suppress dollar demand, especially as markets digest the implications of a massive U.S. spending and tax bill that could add $3.8 trillion to federal debt over the next decade. In contrast, domestic expectations in India remain anchored to a potential easing cycle by the Reserve Bank of India (RBI), a divergence that could further compress forward premiums.

Temporary Tailwinds May Face Structural Headwinds

The rupee’s recent rebound reflects broader regional optimism tied to a softening dollar, trade policy reprieves, and the yuan’s strength. However, structural headwinds remain, including India’s relatively slower currency performance over the quarter and potential challenges in sustaining foreign inflows amid global monetary policy divergence.

For now, the sentiment is positive, but the rupee’s medium-term trajectory will likely hinge on whether the RBI initiates rate cuts, how the Fed responds to inflation data, and if the Trump administration’s trade threats materialize into longer-term structural shifts—or remain politically driven flashpoints.

Source: Reuters

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Economic

Forex

Trump’s Tariff Reversal Fuels Euro Rally, Dampens Dollar Outlook

The euro surged to its highest level in a month on Monday after U.S. President Donald Trump unexpectedly postponed a sweeping 50% tariff package on European Union exports. Markets reacted swiftly, pushing the euro up by 0.55% intraday to $1.1418 before settling at $1.1394. The reversal came just two days after Trump’s aggressive announcement, underscoring the volatile nature of U.S. trade policy and its impact on global currency markets.

Trump’s decision followed a call with European Commission President Ursula von der Leyen, who requested more time to finalize a deal. The new deadline—July 9—marks the conclusion of a 90-day suspension period initially triggered by Trump's "Liberation Day" tariff proclamation on April 2. While the delay calmed immediate concerns, analysts warned that the structural tensions behind the tariff threats remain unresolved.

Dollar Weakens Across the Board Amid Policy Uncertainty

The greenback broadly declined against major currencies, with the U.S. Dollar Index falling 0.15% to 98.93, extending last week’s 1.9% drop. The dollar lost ground even against traditional safe-haven currencies like the yen and Swiss franc. It dipped to 142.23 yen and reached a two-and-a-half-week low of 0.8193 against the franc.

Market participants cited increasing discomfort with the erratic trajectory of U.S. trade policy as well as the fiscal implications of Trump’s new economic agenda. The president’s proposed tax and spending bill, currently being debated in Congress, would add an estimated $3.8 trillion to the federal debt over the next decade, according to the Congressional Budget Office. Trump acknowledged on Sunday that the bill is likely to undergo "significant" revisions in the Senate.

“Sell America” Narrative Returns as Growth Risks Shift

Traders revived the “Sell America” theme that dominated markets in April, reflecting concerns that the U.S. may be shifting toward a less disciplined fiscal stance. Ray Attrill, head of FX research at National Australia Bank, commented that investors are now bracing for a weaker dollar trajectory in the medium term, driven by trade tensions, rising debt levels, and policy inconsistency.

Chris Weston, head of research at Pepperstone, echoed this sentiment, noting that the current strategy marks a pivot from fiscal conservatism to an overtly expansionary agenda. “It is fast becoming a consensus view that the USD is on the path to a multi-year decline,” he stated.

Optimism Returns to Risk-Sensitive Assets

Improved market sentiment also lifted other risk-sensitive currencies. The British pound gained 0.39%, reaching its highest level since February 2022, while the Swiss franc and Japanese yen appreciated modestly against the dollar despite an overall risk-on environment.

Currency strategist Michael Pfister of Commerzbank cautioned against over-interpreting Trump’s tariff pause as a lasting solution. “The brief respite from tariffs that we enjoyed was only temporary,” he said. “It is questionable what has changed fundamentally from just one phone call.”

Still, the broader market response suggests that investors are clinging to hopes that diplomacy can prevent further trade fragmentation and global economic disruption. Equities had fallen late last week amid uncertainty, but the tariff delay and anticipation of upcoming earnings and economic data—particularly the Fed’s preferred inflation gauge, the PCE Index—could provide a new focal point for direction.

Trump’s abrupt pivot on EU tariffs offered immediate relief to currency markets, lifting the euro and restoring confidence in risk assets. However, the episode highlights deeper structural anxieties surrounding U.S. policy direction—both on trade and fiscal discipline. As Washington leans toward expansionary spending and unpredictable tariffs, investors are recalibrating expectations, with the dollar’s relative strength increasingly in question. The path forward may hinge not only on trade outcomes but on how global markets interpret America’s evolving macroeconomic narrative.

Source: Reuters

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Russia-Ukraine Conflict

Putin’s Escalation Sparks Sharp Rebuke from Trump

In a dramatic response to Russia’s most intense aerial offensive since the beginning of the war in Ukraine, U.S. President Donald Trump sharply criticized Russian President Vladimir Putin, calling him “absolutely CRAZY” in a social media post on Truth Social. Trump’s reaction comes after Russia launched a massive overnight barrage involving at least 367 drones and missiles, resulting in at least 12 deaths, including three children, according to Ukrainian authorities.

The scale of the attack marked a grim milestone—it was the largest in terms of weapons fired, even though earlier strikes caused more casualties. The assault, which targeted multiple Ukrainian cities, has escalated the conflict to one of its most violent phases in over three years.

Trump’s condemnation was blunt and personal: “Something has happened to him. He has gone absolutely CRAZY,” he said, referencing Putin’s apparent determination to seize the entirety of Ukraine. Trump warned that such ambitions could lead to Russia’s collapse, stating, “If he does, it will lead to the downfall of Russia!”

More Sanctions Under Consideration, But Tone Remains Divided

Speaking from Morristown, New Jersey, Trump did not rule out the imposition of additional sanctions on Moscow, citing the continuing violence and loss of life. “He’s killing a lot of people. I’m not happy about that,” Trump told reporters. While sanctions are a familiar policy tool, their effectiveness in halting Russian advances remains uncertain amid ongoing offensives and geopolitical gridlock.

Despite his denunciation of Putin, Trump’s message was not uniformly sympathetic toward Ukraine. He publicly criticized Ukrainian President Volodymyr Zelenskiy, saying the leader “is doing his country no favours by talking the way he does,” and warned that Zelenskiy’s remarks “better stop.” This dual criticism highlights Trump’s complex stance—positioning himself as both a peace-seeking intermediary and a vocal critic of both warring leaders.

Russia’s Airstrike: Tactical Shift or Symbolic Message?

Sunday’s attack was not only notable for its size but also for the level of coordination and technological integration, with hundreds of drones and missiles overwhelming Ukrainian defenses. The strike may indicate a strategic pivot by Moscow or a deliberate display of force ahead of upcoming diplomatic events, including potential peace discussions.

While the Kremlin has not commented on Trump’s remarks, it continues to frame the conflict as a “special military operation” designed to prevent NATO expansion. Ukraine, on the other hand, maintains that Russia is waging an unprovoked war of aggression—one that has cost tens of thousands of lives and reshaped the security architecture of Eastern Europe.

Stalemate Persists as Diplomacy Falters

Trump has repeatedly called for a negotiated settlement to the war, yet the positions of Kyiv and Moscow remain fundamentally opposed. With Russia intensifying its eastern campaign and Ukraine under continuous bombardment, prospects for ceasefire or peace talks remain remote.

The U.S. president’s latest rhetoric underscores the increasing frustration among global powers as the war drags on, even while they remain divided on policy approaches. Washington’s strategic posture is being closely watched, particularly in light of Trump’s past statements advocating a realignment of U.S. global commitments.

As the Russia-Ukraine conflict enters a more violent and uncertain stage, Trump’s combative comments signal renewed pressure from Washington—but also introduce mixed messaging. While condemning Russian aggression, he has continued to criticize Ukraine’s leadership, highlighting ongoing tension within Western diplomatic strategy. Whether additional sanctions will shift the war’s trajectory remains unclear, but the scale of the latest attack and the rhetoric surrounding it affirm one reality: peace remains a distant and increasingly complex goal.

Source: Reuters

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Economic

Tariffs Return, and So Does a Strategic Loophole

As U.S. trade tensions rise again under the Trump administration’s renewed tariff regime, companies are turning to an old, legal strategy in customs law known as the “first sale rule” to reduce import costs. Though the rule has existed since 1988, it is now receiving revived interest across sectors as firms scramble to protect profit margins amid escalating import duties.

The rule allows U.S. importers to declare customs duties based on the price of the first sale in a chain of international transactions—typically the manufacturer’s price—rather than the price paid to a middleman or distributor. For example, if a Chinese manufacturer sells a product to a Hong Kong distributor for $5, who in turn sells it to a U.S. importer for $10, duties can be calculated on the original $5 sale rather than the higher intermediary price. The final retail price, say $40, becomes irrelevant for duty purposes.

Revived Usage Amid Rising Tariff Risks

Lawyers and consultants confirm that interest in the first sale rule is surging in lockstep with new tariff threats. Brian Gleicher, senior attorney at Miller & Chevalier, emphasized that while the rule has always been legal, the spike in 25% tariffs on Chinese imports back in 2018 marked the first major wave of corporate interest. With the Trump administration once again signaling tough import measures—most recently threatening 50% duties on EU goods and 25% on Apple products not made in the U.S.—businesses are urgently re-evaluating their customs strategies.

Sid Paruthi, partner at Moss Adams, noted that “calls started coming in” during the 2018 tariffs and have picked up again this year. This resurgence is not limited to traditional manufacturing or consumer goods, but also includes biotech, electronics, and even BBQ equipment producers.

Strict Conditions, High Rewards

To qualify for the rule, importers must meet several legal criteria: there must be multiple arms-length sales in the supply chain, involving unrelated parties; documentation must prove the goods were destined for the U.S. from the beginning; and clear records of the original transaction price must be maintained. While these requirements introduce complexity, especially when vendors are reluctant to disclose pricing structures, the cost savings often outweigh the administrative burden.

Corporate consultant Rich Taylor, based in Ningbo, China, emphasized the importance of trust and transparency among suppliers, intermediaries, and importers. “If you don’t use it, your competitor might—and you’ll lose that cost advantage,” he warned. He has been advising Fortune 500 firms on this rule since the original Trump-era tariffs began.

Who’s Using It—and Why It Matters

Luxury and high-value goods producers stand to gain the most. Italian fashion house Moncler recently told investors that applying the first sale rule has had a “significant benefit” for its cost structure, noting that its industrial price is often just half the intercompany transfer price. Similarly, Swiss biotech firm Kuros Biosciences announced operational changes that will enable it to adopt the method by shifting wholesale functions to Zurich.

Other adopters include Traeger, a U.S. BBQ equipment brand, and Fictiv, a manufacturing technology firm, both of which acknowledged the rule during their recent earnings calls as part of broader strategies to offset escalating trade costs.

Implications for U.S. Trade Policy

While entirely legal, the growing reliance on the first sale rule raises strategic questions. It directly challenges the effectiveness of the Trump administration’s goal to boost domestic production and tariff revenue by making imports more expensive. By circumventing higher intermediary prices, importers effectively reduce duty obligations, weakening the intended financial pressure behind tariff policy.

U.S. Customs and Border Protection has not released recent usage data for the first sale rule, and the White House has yet to comment on its broader implications. However, the growing interest across industries—from biotech to apparel—signals a systemic shift in how companies navigate global trade regulations without technically violating them.

As the U.S. navigates a more protectionist trade landscape, the first sale rule has emerged as a vital, legal countermeasure for cost-conscious importers. While it does not violate trade law, its use could blunt the intended impact of tariff hikes and delay shifts toward onshoring. For now, companies that can manage the documentation and build trust across their supply chains are poised to gain a significant competitive advantage—proving that in global trade, agility and compliance can go hand in hand.

Source: CNBC

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Economic

Uncertainty Grips Market as Tariff Threats and Inflation Data Loom

Following a sharp run-up in April, U.S. stock markets entered a cautious consolidation phase last week as rising bond yields, driven by deficit concerns, and renewed trade policy risks shook investor confidence. The dual threat of escalating tariffs and interest rate pressures now places markets at a critical inflection point, with this week’s upcoming data poised to either validate recent optimism or deepen the pullback.

President Trump’s surprise announcement of a potential 25% tariff on Apple products not assembled in the U.S., along with a proposed 50% duty on European Union goods starting in June, rattled financial markets. Although the tariff on EU imports has been delayed until July 9, major indices saw sharp weekly declines, with the S&P 500 down 2.6%, the Nasdaq and Dow both shedding around 2.4%, and the Russell 2000—sensitive to interest rates—dropping nearly 4%.

Trump’s Trade Strategy and the Bond Market Response

The spike in U.S. Treasury yields last week reflected investor anxiety over potential fiscal expansion through new tariffs. The 30-year bond yield surged past 5.1%, nearing its highest level since 2007, while the 10-year yield rose above 4.6%. Though yields moderated slightly on Friday after Trump softened his tariff stance, the broader message remains: the market views trade policy not just as a geopolitical lever but as a domestic inflation risk channel.

The implication is clear: further tariff escalation may not only pressure consumer prices but also extend the Fed’s higher-for-longer interest rate stance. Strategist Michael Kantrowitz of Piper Sandler emphasized that market recovery depends on two key developments—withdrawal of new tariff proposals and stability in Treasury yields. Encouragingly, the 10-year yield has retreated below the 4.5% threshold, easing short-term stress.

Nvidia's Earnings: A Bellwether for Market Sentiment

Investor focus this week will also center on Nvidia’s Q1 earnings report, expected Wednesday. Projections suggest earnings per share (EPS) of $0.88 on revenue of $43.3 billion—up significantly from $0.61 on $26 billion in the same quarter last year. Nvidia’s dominant position in AI chip production has made it a market mover, contributing roughly 17% of the S&P 500’s gain since ChatGPT’s release in late 2022.

With over 93% of S&P 500 companies having reported earnings, Q1 profits have grown by 12.9% on average—well above the 7.1% estimate from late March. Nvidia’s results may determine whether investor optimism toward AI and tech can sustain market resilience amid policy noise.

Fed's Favorite Inflation Gauge in Focus

The most critical economic release this week is the April Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred measure of inflation, due Friday. Core PCE, which excludes volatile food and energy prices, is expected to ease to 2.5% year-over-year from 2.6% in March. On a month-over-month basis, the increase is forecast at a modest 0.1%.

While current inflation trends remain manageable, economists like Aditya Bhave of Bank of America caution that the effects of new tariffs may only begin to show in May data, to be released in June. Hence, this week's PCE may serve more as a baseline than a definitive judgment on future pricing pressure.

Confidence Underpinned by Earnings, Despite Policy Volatility

Despite the policy-induced volatility, market sentiment remains surprisingly intact. Corporate America has largely demonstrated earnings resilience, with many firms showing an ability to adapt to higher input costs and global trade disruptions. Analyst Mike Wilson of Morgan Stanley maintains a constructive view on U.S. equities for 2025, citing strong earnings momentum and persistent innovation in sectors like technology and services.

Investors appear to be navigating the noise with selectivity, choosing to emphasize company fundamentals over geopolitical theatrics. However, the durability of this confidence will be tested in the coming weeks as trade developments evolve and macroeconomic data either confirm or contradict hopes for a soft landing.

As markets enter a critical juncture marked by trade unpredictability, inflation scrutiny, and tech sector expectations, this week’s data and policy signals will shape both tactical positioning and strategic outlooks. The equilibrium between fiscal noise and earnings strength remains fragile, but with cautious optimism still intact, investors await clarity in what could be a pivotal stretch for global markets.

Source: Yahoo Finanace

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Economic

Renewed Trade Momentum Ahead of June Summit

Japan’s top trade negotiator, Ryosei Akazawa, has confirmed that talks with the United States are intensifying, with the goal of achieving a significant breakthrough in June during a scheduled meeting between Prime Minister Shigeru Ishiba and President Donald Trump. This renewed urgency comes as part of broader discussions held on the sidelines of the G7 summit in Canada and recent bilateral meetings in Washington.

The negotiations are gaining momentum following Trump’s unexpected endorsement of a partnership between Nippon Steel and United States Steel Corp—an initiative that had previously stalled under the Biden administration. This endorsement has reignited hopes in Tokyo that Washington may adopt a more conciliatory approach to Japanese trade interests in the coming months.

Investment as Leverage: Japan’s Strategic Economic Role

President Trump’s declaration that the Nippon Steel–US Steel partnership could yield 70,000 American jobs and contribute $14 billion to the U.S. economy suggests a shift in tone from protectionism toward strategic collaboration. Japan, already the largest foreign investor in the U.S. from 2018 to 2023 according to the U.S. Department of Commerce, holds a strong negotiating card.

While Akazawa refrained from confirming whether the partnership involved a full acquisition, he acknowledged that Nippon Steel’s investment would bring tangible benefits to the U.S. economy. In parallel, he has firmly requested that the U.S. reconsider its tariff policies on Japanese goods—particularly in light of the looming increase in tariffs on autos, steel, and aluminum from 25% to a potential 24% comprehensive rate by July if no agreement is reached.

Three Pillars of Negotiation: Trade, Non-Tariff Barriers, and Economic Security

The ongoing technical discussions are centered around three key pillars: expanding bilateral trade, reducing non-tariff barriers, and strengthening cooperation in economic security. According to Akazawa, these latest dialogues have been “more candid and in-depth” than prior rounds, signaling substantive progress.

The stakes are particularly high for Japan’s automotive sector, which accounts for about one-third of the country’s exports to the U.S. and supports over 8% of Japan’s workforce. Companies like Toyota have warned of multi-billion-dollar losses should the proposed 24% tariff on vehicle imports materialize. Such an outcome would inflict direct harm on Japan’s manufacturing base and domestic employment, putting pressure on negotiators to secure concrete concessions.

Domestic Political Pressures Shape Japan’s Strategy

Prime Minister Ishiba faces his own political urgency, with approval ratings nearing record lows ahead of this summer’s upper house elections. A well-timed trade agreement with the U.S. could provide a critical boost. However, any perceived compromise on sensitive issues—particularly agriculture—without securing relief on auto tariffs could backfire domestically and further erode public support.

This complex political landscape adds a layer of nuance to the negotiations. While Ishiba needs a win, he must carefully balance external diplomacy with internal sensitivities, avoiding the appearance of yielding too much to American demands without reciprocal gains.

Cautious Optimism Amid Tight Timelines

This marks the third high-level round of talks between Akazawa and U.S. counterparts. He is scheduled to return to Washington to meet U.S. Treasury Secretary Scott Bessent on May 30, just days before the next G7 summit—an event that could serve as both a diplomatic platform and a deadline for progress.

Despite the increasing intensity and visibility of the negotiations, Akazawa cautioned against rushing the process. “There is no benefit in hurrying,” he stated, highlighting the need for a well-calibrated agreement that aligns economic, political, and diplomatic priorities.

A Deal Within Reach, But Delicate in Execution

As Japan and the U.S. inch closer to a potential trade agreement, both sides are navigating a fragile balance of economic logic and political necessity. For Japan, securing tariff relief—especially on autos—without compromising sensitive sectors like agriculture is the cornerstone of a successful deal. For the U.S., embracing Japanese investment while projecting economic strength at home defines the negotiation tone.

Whether this diplomatic choreography culminates in a binding agreement or sets the stage for further engagement, June promises to be a pivotal month for U.S.–Japan trade relations. The outcome could reshape not only tariff regimes but the broader trajectory of economic cooperation between two of the world’s leading economies.

Source: Bloomberg

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Economic

Interest Rate Reduction: Catalyst for Credit Revival

Since the beginning of 2025, the State Bank of Vietnam (SBV) has maintained an accommodative monetary policy stance. This includes holding policy rates at historically low levels, ensuring abundant liquidity, and actively supporting market credit flows. The effectiveness of these measures is evident: average lending rates now range between 6.6% and 8.9% per annum for new loans, marking a significant drop compared to the same period in previous years. Prioritized sectors—including manufacturing, exports, agriculture, and social housing—benefit from ultra-low rates around 3.9%, even below the SBV’s cap of 4.0%.

Deposit rates have mirrored this trend. Medium-term deposits (6–12 months) yield between 4.5% and 5.5%, while long-term deposits (12–24 months) offer up to 6.0%. Despite easing interest income, this environment reduces funding costs for banks, allowing for credit expansion without major erosion of profitability—at least in the short term.

By mid-April 2025, total outstanding credit stood at 16.23 quadrillion VND, up 3.95% from the end of 2024. At this pace, full-year credit growth could reach 10–12%, translating to a capital injection of 2.5–3.2 quadrillion VND into the economy. SBV Deputy Governor Dao Minh Tu emphasized that if GDP growth exceeds 8%, credit expansion must match at least this scale to sustain economic recovery momentum.

Narrowing Net Interest Margins: A Strategic Trade-Off

While credit growth accelerates, profitability is not rising proportionally. Banks are experiencing compression in their net interest margin (NIM)—a key profitability metric. In Q1 2025, several commercial banks, including Vietcombank, Techcombank, MB, and ACB, saw their NIM shrink by 0.2 to 0.5 percentage points.

This margin squeeze results from lending rates declining more sharply than deposit rates. For example, while average lending rates fell by 0.6 percentage points, the reduction in 12-month deposit rates was only about 0.12. The disproportionate movement necessitates a redistribution of income: banks must absorb some of the cost to maintain market stimulation.

According to Trần Hoàng Sơn, Chief Market Strategist at VPBankS, this margin-sharing reflects a systemic responsibility: when businesses regain financial health, banks benefit from long-term portfolio quality and reduced provisioning. Some banks have launched lending packages with interest rates 2–3 percentage points below market rates, particularly targeting small and medium-sized enterprises (SMEs).

To adapt, banks are restructuring their operating models—streamlining costs, boosting non-interest income through services such as bancassurance and asset management, and improving CASA (Current Account Savings Account) ratios to access lower-cost funding.

External Frictions: Exchange Rates, Liquidity, and Capital Competition

In addition to internal margin pressures, Vietnamese banks must navigate volatile external conditions. The USD/VND exchange rate reached 25,990 by late April, a 1.6% rise within a month. This reflects divergent monetary cycles between Vietnam and economies like the U.S., where the Federal Reserve continues to delay rate cuts.

Liquidity remains stable. Interbank overnight rates dropped to 2.35% in late April before rebounding to around 4% in early May. The SBV injected nearly 76 trillion VND into the system via open market operations (OMO) to ensure funding availability.

However, capital competition is intensifying. While major banks offer 12-month deposit rates around 4.8–5.0%, smaller institutions like LPBank and Vikki Bank lure depositors with rates as high as 7.5%. These divergent funding costs could limit further reductions in lending rates, especially if inflationary pressures re-emerge.

Redefining the Bank's Role in Economic Recovery

Banks are no longer merely credit providers; they are now central pillars in Vietnam’s macroeconomic rehabilitation. With capital markets such as bonds and equities still fragile, banks serve as the primary channels of financial intermediation.

According to VPBank’s branch director in Ca Mau, Lê Quán Thượng, sustained low lending rates are vital for supporting businesses in remote areas where financial access remains limited. Directing credit toward prioritized sectors not only fosters inclusive growth but also reduces dependence on speculative or non-productive investments like high-end real estate.

Although short-term profits may be compressed, long-term gains are attainable. As loan portfolios improve and provisioning costs decline, banks can stabilize return on assets (ROA) and equity (ROE) metrics. Even if these indicators show modest growth, financial durability and systemic credibility are poised to strengthen.

Profit Sharing as Strategic Investment

Vietnam’s current low-interest-rate policy is not just a technical adjustment; it reflects a long-term vision of inclusive, stable growth. Banks embracing this shift are not sacrificing profitability but investing in long-term resilience. The redistribution of profits today enhances institutional reputation, broadens financial inclusion, and reinforces banks’ foundational role in the national growth model.

If Vietnamese banks maintain this trajectory—balancing asset quality, risk control, and innovation in service delivery—they will ultimately realize more durable, diversified, and sustainable profits. In a well-functioning economic ecosystem, banks are not merely beneficiaries of growth but its architects.

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Rupee Strengthens Beyond 85/USD as Weaker Dollar and Yuan Gains Buoy Asian Currencies

Rupee Rises as Dollar Sentiment Sours

Stronger Yuan Adds Momentum to Asian FX Rally

Forward Premiums Decline Amid Rally and Yield Dynamics

Temporary Tailwinds May Face Structural Headwinds

Source: Reuters

Euro Surges to One-Month High as Trump Retreats on EU Tariffs, Dollar Slips Amid Fiscal Uncertainty

Trump’s Tariff Reversal Fuels Euro Rally, Dampens Dollar Outlook

Dollar Weakens Across the Board Amid Policy Uncertainty

“Sell America” Narrative Returns as Growth Risks Shift

Optimism Returns to Risk-Sensitive Assets

Source: Reuters

Trump Blasts Putin’s Escalation in Ukraine as “Crazy,” Hints at More Sanctions While Criticizing Zelenskiy

Putin’s Escalation Sparks Sharp Rebuke from Trump

More Sanctions Under Consideration, But Tone Remains Divided

Russia’s Airstrike: Tactical Shift or Symbolic Message?

Stalemate Persists as Diplomacy Falters

Source: Reuters

The Legal Loophole: How U.S. Businesses Are Quietly Reducing Tariff Costs with the "First Sale Rule"

Tariffs Return, and So Does a Strategic Loophole

Revived Usage Amid Rising Tariff Risks

Strict Conditions, High Rewards

Who’s Using It—and Why It Matters

Source: CNBC

Market Braces for Key Inflation Data and Trade Policy Shocks Amid Fragile Confidence

Uncertainty Grips Market as Tariff Threats and Inflation Data Loom

Trump’s Trade Strategy and the Bond Market Response

Nvidia's Earnings: A Bellwether for Market Sentiment

Fed's Favorite Inflation Gauge in Focus

Confidence Underpinned by Earnings, Despite Policy Volatility

Source: Yahoo Finanace

Japan Edges Toward Breakthrough Trade Deal with the U.S.: Diplomacy, Tariffs, and Strategic Stakes

Renewed Trade Momentum Ahead of June Summit

Investment as Leverage: Japan’s Strategic Economic Role

Three Pillars of Negotiation: Trade, Non-Tariff Barriers, and Economic Security

Domestic Political Pressures Shape Japan’s Strategy

Cautious Optimism Amid Tight Timelines

A Deal Within Reach, But Delicate in Execution

Source: Bloomberg

Vietnam’s Banking Sector in a Low-Interest Era: Shared Profit or Strategic Gain?

Interest Rate Reduction: Catalyst for Credit Revival

Narrowing Net Interest Margins: A Strategic Trade-Off

External Frictions: Exchange Rates, Liquidity, and Capital Competition

Redefining the Bank's Role in Economic Recovery

Profit Sharing as Strategic Investment

Risk Disclosure