Is 2025 the ideal time to hold USD?

In the context of increasingly complex global monetary policies, many investors are beginning to question the direction of the US dollar. To answer this question, we need to analyze the current situation and the factors influencing the USD’s value in the near future.

Current USD Status: Balancing Strength and Risks

The USD remains the most favored foreign exchange currency worldwide, serving for most international trade transactions. However, the US Dollar Index (DXY) has experienced notable fluctuations in recent years.

Based on exchange rate data over the past 10 years, the USD has risen from an average of 19,000 VND/USD in 2010 to approximately 23,200 VND/USD today. However, this growth has not been linear; there have been clear periods of rise and fall, especially during times of major monetary policy changes by leading central banks.

Key Factors Affecting USD Exchange Rates

Demand for Dollars Amid Economic Difficulties

When financial markets face instability, investors tend to seek safer instruments. For this reason, demand for USD increases, boosting the US Dollar Index (DXY) despite efforts by central banks to devalue the currency.

Supply and Demand Imbalance

The demand for USD payments from businesses, especially in emerging markets, continues to rise. Countries that must settle debts in USD, particularly those heavily reliant on access to US dollars, face pressure to maintain the currency’s value.

Impact of Energy Prices

Fluctuations in crude oil prices directly affect the currencies of energy-exporting countries. When oil prices fall, USD is often viewed as a safe store of value, which can lead to an appreciation of the dollar against the local currencies of oil-dependent nations.

USD Trend Forecast for the Near Future

Economists predict that the USD’s strength will continue to fluctuate. Although the US government and Federal Reserve have implemented numerous monetary stimulus policies, the actual demand for USD remains high.

However, as other economies recover and adopt similar supportive policies, the relative strength of the USD may diminish. PMI indicators from major countries show signs of economic recovery, which could lead to a decrease in the dollar’s value against other currencies.

Should You Buy USD Now?

Long-term vs Short-term Investment

If considering USD as a long-term investment, it can be compared to gold. Over a decade, both have appreciated significantly. However, in terms of long-term returns, gold still outperforms due to inflation pressures and near-zero interest rates on USD savings.

Conversely, short-term investments in USD offer higher profit opportunities. Given USD’s high liquidity and continuous volatility driven by economic news, short-term traders can capitalize on price swings to generate profits.

Practical Investment Strategies

• Choose the right timing to buy: Avoid purchasing USD when the exchange rate is high. Monitor support and resistance levels to identify optimal entry points.

• Compare rates across banks: USD buy and sell rates vary between banks. Check and compare to find the best deal.

• Use USD for foreign investments: An effective approach is to buy USD and then invest in international assets such as stocks, cryptocurrencies, or commodities.

• Comply with legal regulations: Ensure adherence to foreign exchange regulations of your country to avoid legal issues.

Risks to Consider

Investing in USD, especially short-term, carries risks. Exchange rates can move unexpectedly, causing losses. To mitigate risks, investors should:

• Continuously update themselves on economic and monetary policy news from central banks
• Understand the economic factors influencing USD exchange rates
• Avoid borrowing money to invest in USD
• Prepare a stop-loss plan before trading

Besides USD, investors can consider other investment opportunities such as gold, crude oil, stocks, or stock indices to diversify their portfolios.

In summary, the question “Should I buy USD now” does not have a definitive answer; it depends on individual investment goals, holding period, and risk tolerance. Careful analysis is essential before making a decision.