VND - Vietnamese Dong

Vietnamese Dong overview

Vietnamese Dong is issued and regulated by the State Bank of Vietnam. The currency has undergone several transformations throughout its history, especially following periods of economic reform and changes in Vietnam's political landscape.

The đồng has faced challenges due to inflation and periodic devaluation. As of the present day, the Vietnamese đồng is a relatively weak currency compared to major currencies like the US dollar and Euro. Despite these challenges, the đồng remains a central aspect of Vietnam's economy and is used for domestic transactions.

While the đồng is not widely traded internationally, the Vietnamese government has taken steps to gradually liberalize the currency exchange system. The use of the đồng is restricted to domestic transactions, and foreign exchange is typically conducted through major banks or official currency exchanges.

History of the Development of the Vietnamese Dong

The Vietnamese Dong has undergone multiple phases in its development as follows.

The First Currency during the Dinh Dynasty

In the 10th century, the first Vietnamese currency called "Thai Binh Hung Bao" was issued under the Đinh Dynasty, marking a historic milestone in Vietnam's monetary system. The feudal currency was primarily minted from copper, zinc, or silver, reflecting the stability and economic development during each dynasty. Measurement units such as "quan" and "thuoc" were widely applied, standardizing trade transactions among the population.

Paper Money during the Tran Dynasty

Vietnam was one of the earliest countries to issue paper money, second only to China. In 1396, the Trần Dynasty issued "Thong Bao Hoi Sao," the first paper currency, demonstrating the strategic vision of the feudal state in improving payment methods.

Colonial Era and Indochinese Currency

When the French colonialists took control, the Indochinese currency system was established, which included Vietnam. This system featured silver coins and paper money with colonial symbols. The Indochinese currency played a central role in trade, though its value fluctuated due to the effects of war and economic instability.

Vietnamese Currency after the August Revolution of 1945

After the success of the August Revolution in 1945, a new era began. In 1946, President Hồ Chí Minh signed a decree to issue Vietnamese paper money, ending reliance on the Indochinese currency system. From that point, the currency officially became a symbol of an independent nation, closely tied to the resistance wars and nation-building efforts.

Vietnamese Dong denominations

Since 1985, Vietnam has unified its monetary system and issued new banknotes. After a period of absence, coins were reissued in 2003 with denominations of:

• 200 VND

• 500 VND

• 1,000 VND

• 2,000 VND

• 5,000 VND

This time, the coins were made of alloys and had a more modern design, aimed at serving transactions in vending machines and public payment systems.

However, due to people's habits and the inconvenience in practical transactions, coins were not widely used. Today, coins are almost no longer in circulation in everyday life in Vietnam but still remain a part of the country's monetary history.

In 2003, polymer banknotes were introduced for the first time, offering high security and outstanding durability. The denominations are:

• 1,000 VND (Lumber productions )

• 2,000 VND (Textile factory)

• 5,000 VND (Tri An hydropower plant)

• 10,000 VND (Bach Ho oil field)

• 20,000 VND (Covered bridge in Hội An)

• 50,000 VND (Hue imperial city)

• 100,000 VND (Temple of Literature)

• 200,000 VND (Ha Long Bay)

• 500,000 VND (Ho Chi Minh's birthplace in Kim Lien)

Vietnamese Dong Exchange Rate and Role in the Economy

The Vietnamese Dong (VND) is currently one of the lowest-valued currencies in the world. The exchange rate of VND against strong currencies like the USD and EUR typically stands high, with 1 USD equivalent to approximately 24,000 VND. This means that the intrinsic value of the Vietnamese currency has yet to be highly appreciated in the international market. However, within the domestic context, VND still plays a crucial role in promoting macroeconomic stability.

In the context of international economic integration, the exchange rate of the Vietnamese Dong plays an important role in trade and investment transactions. The State Bank of Vietnam maintains a flexible exchange rate policy, controlling inflation and ensuring macroeconomic stability.

The Vietnamese government adopts a managed float exchange rate policy within a certain band to limit excessive fluctuations and maintain the competitiveness of exports. This policy not only supports manufacturing and light industry sectors but also helps control inflation and attract foreign investment. As a result, the Vietnamese Dong has become an effective tool for stabilizing the economy, protecting citizens from global financial shocks, and fostering sustainable economic development.

Despite facing challenges such as inflation pressures and international market volatility, the Vietnamese Dong has demonstrated relative stability compared to many currencies in the region. The future outlook depends on enhancing monetary policy flexibility, expanding capital markets, and deepening integration with the global economy.

Although the value of VND cannot yet be compared with stronger currencies, Vietnam is gradually asserting its position internationally through stable economic growth, robust foreign investment, and transparent fiscal policies. In the future, the Vietnamese Dong has the potential to appreciate along with the nation's sustainable development.