Vietnam’s trade deficit narrowed to $1.2 billion in February 2026, down from $1.8 billion in January, even as exports fell short of expectations by 3.2%. The improvement reflects stronger import controls and resilient domestic demand, supporting the Vietnamese dong and regional equities.
- Trade deficit narrowed to $1.2 billion in February 2026, from $1.8 billion in January
- Exports fell 3.2% YoY, missing estimates by 4.5 percentage points
- Imports dropped 7.1% YoY, driven by tighter controls and reduced capital goods demand
- VND/USD rate stabilized at 24,750, supported by $280M in central bank foreign exchange interventions
- VNQ ETF gained 1.8% in early March; FXI saw $140M in net inflows over one week
- Vietnam’s manufacturing sector maintains 89% of pre-pandemic export capacity
Vietnam’s external balance showed unexpected resilience in February 2026, with the trade deficit narrowing to $1.2 billion from $1.8 billion in the prior month. Despite a 3.2% year-on-year decline in exports—missing forecasts by 4.5 percentage points—the deficit contraction was driven by a 7.1% drop in imports, signaling tighter import management and disciplined fiscal policy. The export shortfall was concentrated in electronics and textiles, key sectors contributing 41% and 19% of total exports, respectively. The improvement in the trade balance, despite weaker export performance, suggests structural strength in Vietnam’s current account. The central bank's intervention in the foreign exchange market, including $280 million of official reserve sales in February, helped stabilize the VND/USD exchange rate, which held steady at 24,750 VND per dollar. This stability has reduced currency volatility, a key concern for foreign investors in emerging markets. The shift has positive implications for regional equities and debt. The VNQ ETF, tracking Vietnamese stocks, rose 1.8% in early March, while EM-focused funds like FXI saw net inflows of $140 million over the week. Investors are reassessing Vietnam’s supply chain resilience amid global trade uncertainties, with Vietnam’s manufacturing sector maintaining 89% of pre-pandemic export capacity. Market participants now view Vietnam as a more stable EM play, particularly given its low reliance on imported oil and diversified export destinations. Thailand, Indonesia, and Malaysia are also benefiting from improved regional trade dynamics, with regional EM bond spreads tightening by 12 basis points.