Commerzbank analysts report that Vietnam's July inflation eased to 4.5% year-on-year, keeping the average close to the 4.5% target set by authorities [1]. Despite this moderation in inflation, the country's trade deficit widened to USD 3.6 billion in July, surpassing the Bloomberg consensus estimate of USD 2.5 billion and up from USD 2.6 billion in June. This marks the eighth consecutive monthly trade deficit for Vietnam [1]. The widening deficit is attributed primarily to strong import growth, particularly in capital goods, intermediate inputs, and energy, which are linked to expanding manufacturing capacity rather than a decline in external competitiveness [1].
Looking forward, Commerzbank highlights potential risks to Vietnam's steel exports due to the European Union's Carbon Border Adjustment Mechanism (CBAM) and ongoing US anti-dumping measures on certain Vietnamese steel products [1]. Despite these external headwinds, foreign direct investment (FDI) disbursements increased by 11.8% year-on-year in the first seven months of 2026, indicating continued robust investment momentum [1].
In the foreign exchange market, the USD/VND exchange rate rose by 0.1% to 26,277 yesterday, with the Vietnamese Dong remaining slightly stronger year-to-date [1]. The stability of the Dong, despite the widening trade deficit and external risks, suggests resilience in the currency and underlying economic fundamentals [1].
CONCLUSION
Vietnam's Dong has remained stable even as the trade deficit widens and external risks to exports increase. Strong FDI inflows and resilient import demand for manufacturing expansion underpin the currency's performance, though future challenges from EU and US trade measures warrant close monitoring.