The Impact of Fluctuations in Gold Prices and Exchange Rates on Vietnam's Economy and Growth: Late 2025 and 2026

The Impact of Fluctuations in Gold Prices and Exchange Rates on Vietnam's Economy and Growth: Late 2025 and 2026

Author: Master, Nguyen Tan Quang – Lecturer, Van Hien University.

Abstract

Fluctuations in gold prices and exchange rates are currently exerting significant impacts on Vietnam's economy in late 2025 and throughout 2026. The rising price of gold and the depreciation of the Vietnamese Dong (VND) not only fuel inflationary pressures but also disrupt the balance of trade and domestic consumer sentiment. This study analyzes the dynamics of gold prices and major foreign currencies (specifically the USD) to outline the influencing factors on Vietnam's growth targets. Based on the findings, the research proposes several policy implications aimed at achieving sustainable growth objectives.

Keywords: currency depreciation, consumer sentiment, economic growth, exchange rate, gold price.

Introduction

Macroeconomic Context in 2025: The 'Vibration' of Gold and Exchange Rate Variables

In the second half of 2025, the Vietnamese economy accelerated despite a trade shock from the US, with Q3/2025 GDP increasing by 8.23% year-on-year. September inflation remained around 3.38%, below the target threshold. However, this stable foundation is being challenged by two sensitive variables: the record high global gold price and the volatility of the USD/VND exchange rate.

Internationally, gold set multiple new records in Q3–Q4/2025 as safe-haven flows surged amid geopolitical tensions. Furthermore, the cycle of interest rate cuts by major central banks was delayed, and trade risks escalated. In some sessions, the spot gold price surpassed the $4,000/oz mark, prompting financial institutions to raise their forecasts for 2025 - 2026.

Domestically, the SJC gold bar market repeatedly peaked in August–September 2025, at times reaching the VND 126 - 133 million/tael range. This volatility is accompanied by a significant gap with global prices, despite the recent adjustment in the management framework through Decree No. 232/2025/ND - CP (amending Decree No. 24/2012).

SITUATED VOTALITY AND THE IMPACT ON ECONOMICAL GROW RATE

Gold Market

Gold Market Management: The Narrow Target of Price Discrepancy

On August 26, 2025, the Government issued Decree No. 232/2025/ND - CP, amending and supplementing gold management mechanisms, assigning the Ministry of Science and Technology (MOST) to coordinate with the State Bank of Vietnam (SBV) in issuing national standards for jewelry and bar gold. The decree aims to restructure the gold market, enhance transparency, and reduce speculative activities and the price gap.

Decree No. 232/2025/ND-CP focuses on standardizing gold bar and jewelry quality, strengthening quality supervision, and encouraging producers to adopt international standards. The government also emphasizes expanding the official gold supply network to minimize non-standard gold products. These measures are expected to narrow the gap between domestic and international gold prices, thereby reducing pressure on the VND exchange rate and stabilizing the financial market.

Theoretically, when barriers to production and circulation are reduced, the SJC price premium over the global price should narrow over time. However, the implementation of standards, licensing, and rebalancing of supply and demand requires time. The initial phase may see price volatility due to "buy-ahead" expectations, requiring authorities to closely monitor household sentiment to prevent the wealth effect from spreading to consumption.

Foreign Exchange Market

Regarding the exchange rate, the Vietnamese Dong has been under persistent pressure from a strengthening USD since 2024, with depreciation continuing into 2025 following the US dollar's strong cycle. Both domestic and international institutions recognize that further volatility remains. Market data indicates a 3 - 3.5% increase in the USD/VND rate in 2025 year-to-date, with major commercial banks quoting rates around VND 26,100–26,400/USD by the end of October 2025.

Assessment of Market Status and Relationship to Growth

The Foreign Exchange Rate: USD/VND

In the second half of 2025, the USD/VND exchange rate is a key factor affecting multiple facets of the Vietnamese economy. The strengthening of the USD against other currencies led to the VND/USD rate rising to VND 26,400/USD by the end of October 2025, triggering the following major impacts:

Inflation and Price Expectations

When the VND depreciates against the USD, the import price of USD-denominated goods (fuel, raw materials) increases. Core inflation experiences spillover pressure with a lag of several quarters. However, by the end of Q3/2025, the Consumer Price Index (CPI) remained below 4% due to flexible monetary management, non-overheated domestic demand, and price reductions in certain commodity groups. The SBV has also proactively enhanced the flexibility of its quoted-rate mechanism and adjusted the USD selling price to "absorb" the shock.

Impact on Exports and Imports

A weak VND typically supports exports, but the US market has been directly affected by tariff policies. From August - September 2025, the US imposed 20% tariffs on various goods from Vietnam (and 40% on "transshipped" goods), resulting in a 27% drop in footwear exports to the US in September and a 20% reduction in textiles. Businesses have had to narrow profit margins, shift orders to other markets, or negotiate cost sharing.

Consequences for Bank and Corporate Balance Sheets

Exchange rate fluctuations force businesses with foreign currency loans to increase hedging costs. Commercial banks must adjust their foreign currency positions, increasing the cost of USD funds. Foreign investors may engage in net selling of stocks as exchange rate risk increases. Indeed, significant net selling was recorded in 2024, and pressure is forecasted to continue into 2025 by several domestic analytical institutions.

The Gold Market: A Measure of Inflation Expectations and Household Savings

Amid economic uncertainty, gold remains a popular safe-haven asset for Vietnamese citizens. Although gold is no longer an official means of payment, the demand for gold investment is very high, reflected by the SJC gold price repeatedly setting records in late 2025. This significant volatility has also impacted domestic consumption.

Global Gold Wave and Spillover Effects

Investment banks are significantly raising gold price forecasts: HSBC increased its average forecast for 2025 to 3,015/oz and 2026 to 2,915/oz; Bank of America (BofA) even projected a $5,000/oz scenario for 2026 if investment demand increases by about 14%. These forecasts reflect the uncertain global environment: protracted conflicts, escalating trade disputes, and slow US interest rate cuts.

Rising gold prices typically incentivize household hoarding, effectively "freezing" a portion of idle funds. Non-essential consumption may slow down due to a reverse wealth effect if investors "buy at the peak." In Vietnam, gold also serves as a traditional savings vehicle; thus, the sharp volatility in August - September 2025 requires close monitoring of its impact on Q4 retail sales and consumer credit.

Reasons for the Large SJC Price Premium and Associated Risks

In August - September 2025, SJC peaked at VND 125 - 133 million/tael; the premium over the global price remained high, reflecting limitations in certified supply and short-term speculative expectations. When Decree 232 is fully implemented (quality standardization, broadening of gold bar standards, tightening measurement), the gap may narrow, reducing inflationary risks. However, authorities must balance two objectives: narrowing the gap quickly will reduce the incentive for hoarding, but injecting supply too abruptly could disrupt the supply chain, causing a second round of price volatility.

Policy Implications

2026 Outlook and Key Policy Levers

Overall, Vietnam's economic outlook for 2026 remains positive but requires flexible and timely macroeconomic policies. Public investment, a flexible monetary policy, and enhanced domestic production will help the economy maintain sustainable growth and stability in the 2026 period.

Growth and Inflation Prospects

In 2026, Vietnam faces challenges from the international environment. Organizations like the World Bank, ADB, and IMF project Vietnam's growth to be around 6 - 6.7%. However, external factors such as high gold prices and global inflation will exert significant pressure. Gold will continue to be a safe haven for investors amid political and economic instability, potentially leading to reduced domestic consumer spending.

Inflation in Vietnam is forecast at 3 - 4% in 2026, primarily due to increased import prices for raw materials. The government needs to control inflation, especially for imported items such as energy and input materials, to protect domestic purchasing power.

Domestic Policy Supports

Despite unfavorable factors, the Vietnamese economy can sustain its growth momentum thanks to domestic policy supports. A crucial element is public investment, especially large infrastructure projects, which will stimulate production and consumption while creating employment opportunities.

Monetary policy will also remain flexible, with the SBV prepared to adjust the exchange rate and sell foreign reserves to stabilize the VND. This helps maintain liquidity in the banking system and supports businesses, particularly Small and Medium-sized Enterprises (SMEs), in accessing credit.

Furthermore, trade and industrial policy will focus on restructuring supply chains and reducing dependence on imported raw materials. The government will also promote foreign investment in high-tech sectors, renewable energy, and clean manufacturing.

Risks from the International Environment and Response

The international situation remains a factor that cannot be overlooked, especially the trade conflict between the US and China. Increased protectionist measures could affect Vietnam's exports, particularly for labor-intensive goods. To mitigate risk, Vietnam needs to diversify its export markets and accelerate Free Trade Agreements (FTAs) with major partners like the EU and ASEAN.

Fluctuations in gold prices and exchange rates will continue to be two critical factors shaping Vietnam's macroeconomic policy in late 2025 and 2026. These movements impact not only the exchange rate and inflation but also directly affect domestic investment and consumption decisions. To maintain economic stability, the Vietnamese government needs flexible and timely policy solutions to respond to the volatility of these factors.

References:

-        Anh Vũ (2025). Giá vàng tiến sát mức hiệu suất cao nhất trong 46 năm. https://laodong.vn/the-gioi/gia-vang-tien-sat-muc-hieu-suat-cao-nhat-trong-46-nam-1615716