How to Invest in the Vietnam Dong Outside of Buying and Holding; History of the VND
Vietnam Dong is an Exotic Currency worth looking into, especially if you are looking to explore new investment opportunities that have the potential for high returns. Look no further than Vietnam Dong! This rapidly growing currency has captured the attention of investors worldwide thanks to its fascinating historical evolution.
This blog uses the old-school method of investing in exotic currencies. The Vietnam dong is one of our favorite currencies to watch. Many of our subscribers on the YouTube channel hold the Vietnam dong as a viable investment.
Introduction to the Vietnam Dong (VND)
Vietnam Dong is the official currency of Vietnam. The word "dong" means "copper coin" in Vietnamese. The Vietnam Dong was introduced in 1978, replacing the Indochinese Piastre. The exchange rate between the two currencies was 1 dong = 100 piastres.
The Vietnam Dong is issued by the State Bank of Vietnam (SBV), the central bank of Vietnam. The SBV has sole authority over the issuance and management of the currency. The SBV is headquartered in Hanoi and has branches in all major cities across Vietnam.
The Vietnam Dong is pegged to a basket of currencies, including the US dollar, Euro, Japanese Yen, and Chinese Yuan. As of May 2020, the exchange rate was 23,206 VND to 1 USD.
Overview of Vietnam’s Economic History
Vietnam’s economic history is often divided into three periods: pre-reform (prior to 1986), transition (1986-1993), and reform (since 1993).
Pre-reform, Vietnam was a centrally planned economy with a strong focus on agriculture. The country relied heavily on imports, particularly from the Soviet Union, and had little foreign investment. GDP growth was slow and uneven, and living standards were low. These factors result in the currency value being lower against the US dollar.
The transition period began in 1986 with the launch of Doi Moi, a series of reforms designed to liberalize the economy. These reforms included collectivizing agriculture, introducing private ownership and enterprise, and moving towards a market-based pricing system. The reforms led to increased economic growth and improved living standards. However, they also created significant challenges like high inflation and unemployment.
The reform period began in 1993 with the adoption of a new constitution that enshrined private property rights. Since then, the Vietnamese government has implemented a wide range of market-oriented reforms, including privatizing state-owned enterprises, liberalizing the trade regime, and attracting foreign investment. These reforms have helped to boost economic growth and reduce poverty levels.
How to Invest in the Vietnam Dong
The Vietnamese dong has become increasingly popular with foreign investors in recent years. The currency has experienced a period of significant appreciation against the US dollar, making it an attractive investment option.
There are several ways to invest in the Vietnamese dong, including bank deposits, bonds, and stocks. However, it is important to understand the currency's historical evolution before investing.
The Vietnamese dong has its origins in the Chinese yuan. It was first introduced into Vietnam during the reign of Emperor Gia Long in 1802. The currency remained pegged to the Chinese yuan until 1945 when it was revalued at a rate of 1 new dong = 5 old dong.
Following Vietnam's independence from France in 1954, the country experienced a period of instability. This led to a series of devaluations of the dong, culminating in its final peg to the US dollar at a rate of 1 USD = 15,000 VND in 1978.
Since the early 1990s, however, the Vietnamese dong has been gradually liberalized. In 2003, Vietnam joined WTO and began implementing market-based reforms. These reforms led to a sharp depreciation of the dong against the US dollar, from around 16,000 VND/USD in 2003 to over 22,000 VND/USD by 2008.
The global financial crisis caused another wave of depreciation for the dong, but since 2010 the currency has once again begun to appreciate against the green
Historical Exchange Rates and Inflation
Vietnam dong (VND) is the currency of Vietnam. It has been the currency of Vietnam since 1978 when it replaced the Indochinese piastre. The Vietnamese government issued provisional notes for the first time in 1946, replacing the Japanese military notes that had been in circulation since 1945.
The Vietminh government introduced a new monetary system in August 1948, consisting of copper coins (háo) and silver coins (đồng). In 1955, North and South Vietnam were unified under a communist government, and the new Socialist Republic of Vietnam introduced a new currency, the đồng.
The exchange rate between the US dollar and the Vietnamese dong has remained relatively stable over the past few years. However, there has been a significant increase in inflation in Vietnam, which has led to a decrease in the value of the dong against other currencies. According to data from Trading Economics, the consumer price index (CPI) in Vietnam increased from 100.40 points in February 2017 to 107.70 points in February 2018. This represents an annual inflation rate of 7.3%.
The historical exchange rates and inflation rates for Vietnam are shown in the table below:
Date USD/VND CPI Feb-17 22,122 100.40 Feb-18 23,196 107.70 Feb-19 24,777 112.50
% Change 7.9% 12.0% 4.2%
Pros and Cons of Investing in VND
The Vietnamese dong has been through a lot of history, and its recent past is no different. In 1975, the dong was pegged to the U.S. dollar at a rate of 1:1. This rate changed in 1985 when the dong was devalued to 2,800 per dollar. The value of the dong remained relatively stable until the early 1990s, when it began to slowly decline in value. By 1997, the dong had reached 6,000 per dollar.
In recent years, there has been much talk about whether investing in the Vietnamese dong is a good idea. Let's take a look at some of the pros and cons of investing in this currency.
PROS
-The Vietnamese dong has shown signs of appreciation against the US dollar in recent years.
-Vietnam is an up-and-coming economy with a lot of potential for growth.
-Investing in the Vietnamese dong can diversify your portfolio and help you hedge against inflation.
CONS
-The Vietnamese government has been known to intervene in the currency markets, which can create volatility.
-The value of the dong is still relatively low compared to other currencies, so there is potential for further depreciation.
Unconventional Ways to Invest in VND
Vietnam Dong (VND) is the currency of Vietnam. It has been subject to a great deal of volatility over its lifetime but has shown potential as an investment in recent years.
Here are some unconventional ways to invest in VND:
1. Currency ETFs: There are a number of currency ETFs that track the performance of VND. These can be bought and sold on major exchanges such as the NYSE and Nasdaq.
2. Mutual Funds: There are also a number of mutual funds that invest in VND-denominated assets. These can be purchased through brokerages or online platforms such as Fidelity Investments.
3. Exchange-Traded Notes: Exchange-traded notes (ETNs) offer another way to invest in VND without having to purchase the currency directly. ETNs are debt instruments that are backed by the issuer's credit, not by any underlying asset. They trade on exchanges like stocks and can be bought and sold through brokerages.
Conclusion
Investing in Vietnam Dong can be a great opportunity for diversifying their portfolios and making long-term investments. Understanding the currency's historical evolution is essential when making investing decisions, as this will enable you to predict its future value more accurately. As international investors continue to have confidence in the Vietnamese economy, buying into the Vietnam dong now could lead to significant rewards down the line.
