“The State Bank of Vietnam’s (SBV) decision to raise key policy rates by 100bp on 22 September exceeded our expectation that these rates would rise by only 50bp by end-2022. The move came after the Fed raised interest rates by another 75 basis points, prompting a number of central banks to also raise rates last week. On 22 September, the SBV also raised interest rates for the first time in 11 years, increasing the refinancing, overnight lending and SBV loan rates by 100 basis points to return them to March 2020 levels. The SBV has been selling large amounts of US dollars from its foreign exchange reserves and has withdrawn trillions of dong through open market operations to maintain banking system liquidity and indirectly increase interbank interest rates.įollowing the SBV’s net withdrawal, the overnight interbank interest rate rose by 40 basis points ( bps) to 4.9% last week. But the dollar’s rally in 2022 lifted the pair to a record high in September, reaching 23,513 on the last day of the month. The USD/VND exchange rate then declined to 23,080 at the end of 2020 and reached 22,645 by November 2021. Past performance is not a reliable indicator of future results The value of the Vietnamese dong against the US dollar gradually declined from the 2014 devaluation, when it was trading around 21,000, to around 23,600 in March 2020 as investors sought the safe haven of the USD at the start of the Covid-19 pandemic. Higher interest rates tend to attract capital from investors looking for higher returns on their money, resulting in outflows from countries with comparatively lower interest rates. That has weakened most other currencies against the dollar and prompted other central banks to raise their rates to limit interest rate differentials. The value of the US dollar has soared in 2022 in response to the Federal Reserve ( Fed) rapidly hiking interest rates in an effort to tame record inflation. The value of the currency is influenced by Vietnam’s trade flows, foreign currency reserves, economic growth, interest rates and inflation, as well as US monetary policy. ![]() The dong has been devalued five times since 2014 with the aim of boosting exports and ensuring currency stability to control high inflation. The State Bank of Vietnam sets the reference rate for the value of the dong against the US dollar. The dong was revalued in September 1985 at a rate of 10 old dong to one new dong. The two versions were unified when the country became one in 1978. The Vietnamese dong was introduced in North Vietnam in 1946 to replace the French Indochinese piastre, and became the South Vietnam currency in 1953. What affects the Vietnamese dong’s value? In this article, we look at recent exchange rates trends and some of the latest Vietnamese dong predictions from analysts. What drives the value of the Vietnamese dong, and what is the outlook for the currency's future? The VND/USD exchange rate was at a low of 0.00004190 on 30 September.Ī trade surplus and moves by the State Bank of Vietnam (SBV) have supported the dong against other currencies such as the euro (EUR), which is facing its own pressures stemming from the Russia-Ukraine conflict and an economic slowdown. Like other emerging markets currencies, the Vietnamese dong ( VND) has fallen in value against the US dollar (USD) this year as the dollar has rallied to 20-year highs. Any amount in excess of this will need to be declared to Customs at the airport.Will USD strength send VND to fresh lows? – Photo: tanukiphoto / Getty Images If you plan to take money out of Vietnam, you can take out amounts of less than 15 million in Vietnamese dong or USD5000 (or equivalent in other foreign currencies) without declaring this. You can have funds transferred to Vietnam via international money transfer companies like Western Union or Moneygram. It may be difficult to cash travellers’ cheques.ĪTMs are widely available in major cities and tourist areas. Changing money elsewhere is illegal and while higher rate may be on offer you may risk losing your money.Ĭredit cards are widely accepted but, in rural areas particularly, you should carry cash as a back-up. Only change money at official money exchange counters with a clear sign showing this status. The local currency is Vietnam Dong (VND).
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