Vietnam's Currency and Gold Markets on May 12, 2025: Trends and Investment Insights

On May 12, 2025, the Vietnamese dong (VND) and gold prices faced distinct dynamics, shaped by monetary policy, global market shifts, and domestic demand. This analysis delves into the day’s exchange rate and gold pricing trends, their underlying drivers, and their implications for investors.

The Vietnamese Dong: A Weakening Currency

On May 12, the State Bank of Vietnam set the official reference rate at 24,945 VND per USD, marking a 6 VND decline from the prior week’s closing rate. Commercial banks, such as Vietcombank and BIDV, maintained buying rates at 25,780 VND/USD and selling rates at 26,140 VND/USD, reflecting a spread of 360 VND/USD.

The dong has trended downward against the dollar over the past six months. The average rate between October 2024 and May 2025 was 25,396.72 VND/USD, with the lowest point hitting 24,815 VND/USD in October and a peak of 26,013 VND/USD in April. The May 12 rate sits near the lower end of this range, signaling a 1.85% depreciation year-to-date.

Gold Prices: A Premium-Driven Market

On May 12, domestic gold prices surged to 120–122 million VND per tael (37.5 grams) among major retailers like DOJI and SJC. This represents a +700,000–2.5 million VND/tael increase compared to the start of the week.

The global gold price on the same day was $3,328.94/ounce, equivalent to 106.03 million VND per tael when converted at the Vietcombank exchange rate. Domestic prices thus carried a +15.96 million VND/tael premium, driven by:
- Import duties and refining costs (10–15% of the total price).
- Retailer margins to cover distribution and demand fluctuations.
- Currency effects: The weakening dong amplified the cost of importing gold.

Key Drivers of the Market

1. Monetary Policy: The State Bank’s ±5% trading band for commercial banks limits volatility but allows gradual depreciation. The dong’s decline reflects efforts to stabilize exports and manage foreign reserves.
2. Global Gold Trends: Geopolitical risks (e.g., U.S.-China trade tensions) and inflation fears globally boosted gold demand, indirectly pressuring local prices.
3. Domestic Demand: Vietnam’s cultural affinity for gold as a store of value and inflation hedge sustained high local prices, even amid global volatility.

Investment Implications

• Currency Exposure: Investors holding USD or USD-denominated assets gained purchasing power against the dong. The 1.85% annual depreciation suggests the dong may remain weak, favoring USD investments.
• Gold as a Hedge: The 22.24% annual increase in gold prices through April 2025 highlights its role as a safe haven. However, the 15–20% premium over global prices may deter speculative purchases unless geopolitical risks escalate.
• Diversification: Investors seeking exposure to Vietnam’s economy could pair dong-denominated bonds or equities with gold holdings to mitigate currency risk.

Conclusion

On May 12, 2025, Vietnam’s markets underscored a weakening currency and a gold market buoyed by premiums and demand. The dong’s depreciation (1.85% YTD) aligns with its six-month trend, while gold prices remained elevated due to global uncertainty and local factors.

Investors should note:
- The VND/USD rate of 24,945 offers a window to lock in USD-denominated gains, given the dong’s downward trajectory.
- Gold’s +22.24% annual rise makes it a resilient asset, though the premium demands caution.

For those navigating Vietnam’s economy, a balanced portfolio—combining USD assets, selective equities, and gold—could optimize returns amid these dynamics. The interplay of monetary policy and global markets will remain critical to watch in the coming quarters.