USD 2025: Where will the greenback go? A year full of uncertainties for investors

In recent years, the US dollar has always been the focus of global investors. From 19,000 VND/USD in 2010, it has risen to over 23,200 VND/USD today. However, whether to start investing in USD now is a question that many are still uncertain about. To answer this question, we need to understand which economic forces are influencing the exchange rate and forecast how the USD price will behave in the near future.

What economic factors determine the strength of the US dollar?

It is no coincidence that the USD is considered the safest reserve currency in the world. Its strength depends on many interconnected factors.

FED Monetary Policy

The US Federal Reserve can raise or lower interest rates, which directly impacts the attractiveness of USD. When the FED raises interest rates, depositing USD in banks becomes more profitable, increasing demand for USD and raising its value. Conversely, when the FED lowers interest rates, USD becomes less attractive compared to other currencies.

Manufacturing and Export Situation

The PMI (Purchasing Managers’ Index) is a measure of economic health. When PMI of countries like China increases significantly, it indicates economic recovery, capital flows return to these markets, weakening demand for USD. History shows that after major events like the pandemic, as countries begin to recover manufacturing, the USD’s strength often starts to decline. The dollar index (DXY) once reached over 100 points but then dropped to 97-98 points as other economies recovered.

Actual USD Demand from Emerging Markets

Countries with developing economies often need to pay debts in USD, so they need to buy USD for transactions. When these countries face financial difficulties, USD demand spikes, strengthening the dollar.

Oil Prices

Falling oil prices usually help USD appreciate against currencies of oil-exporting countries like Russia, Canada, or Norway. This is related to these countries facing financial difficulties when oil is cheap, forcing them to sell other assets to obtain USD for debt payments.

Forecast of USD in the near future: Key signals to watch

Looking at the current trend, there are some important notes for USD price forecasts in the coming years.

First, major countries worldwide are implementing similar fiscal and monetary policies. This means there is no longer a significant difference between currencies, so the relative strength of USD cannot keep increasing indefinitely. When all central banks print money and lower interest rates, the USD loses its fundamental advantage over the Euro or Yen.

Second, economies are gradually recovering. Stimulus policies have helped production restart, with PMI of various countries rising above 50, especially China showing strong recovery. As other economies strengthen, investment demand for USD weakens.

Third, the US dollar has previously appreciated as a “safe haven” tool. However, as COVID-19 cases decline and the economy stabilizes, the investor’s “search for safety” mentality will gradually fade, weakening the demand to hold USD reserves.

The final factor is the reality that a strong USD creates problems for the US: its exports become more expensive on the international market, making them less competitive. Therefore, the FED has incentives to weaken the dollar to support exports.

Is USD a short-term or long-term investment tool?

The answer depends on your goals.

For long-term investors: USD is not the best choice. Gold still offers higher returns over the long term. USD is directly affected by inflation, and interest rates on USD savings in banks are almost zero. Gold, on the other hand, is a hedge against inflation.

For short-term investors: USD is a great tool. Because it is widely traded on the global forex market, every economic news, unemployment data, inflation, or FED decision immediately impacts the exchange rate. This creates many volatility opportunities within a single day. Investors can use margin (leverage) to amplify profits from these small fluctuations.

Real-world example: If you predict the Euro will strengthen against USD, you can buy 20,000 EUR at 1.2642 with a 3% margin rate, requiring about 759 USD. After one day, if the price rises to 1.3110, you sell and earn a profit of 936 USD. However, remember that if the price moves against you, you could lose your entire initial investment of 759 USD. That’s why forex trading requires daily economic news updates.

Should you buy USD now? Practical notes

If you plan to hold USD as a long-term reserve, consider the following:

Choose the right timing: Check the current USD exchange rate at Vietnamese banks. Select the bank with the smallest buy-sell spread. Avoid buying at peak prices, as it significantly affects your selling price later.

Invest USD through foreign channels: Many succeed by buying USD and investing in stocks, cryptocurrencies, or other instruments abroad.

Comply with legal regulations: Conduct foreign exchange transactions through official channels to avoid illegal trading, which can lead to loss of money and legal risks.

Prepare VND cash in advance: Use your own money, not borrowed funds, to buy USD.

Use reputable brokerage firms: To ensure the lowest spread and safety.

Overall, USD forecast in the near future indicates that this currency will fluctuate rather than follow a clear unidirectional trend. With ongoing global stimulus policies and economic recovery, the demand for USD reserves may decrease compared to the previous crisis period. However, USD remains an attractive investment tool for those who know how to capitalize on short-term fluctuations. The key is to understand economic factors, manage risks well, and only use money you can afford to lose.