History of Vietnamese Currency: How the Dong has Fared Pre and Post Vietnam War
Since Vietnam has settled on a successful economic policy that has allowed it to join the global economy, now is the best time to invest in the Vietnamese dong. At the current rate of Vietnam’s economic boom, Vietnamese money is expected to revalue.
Still, to grasp why the Vietnamese money is so undervalued and why it’s value is expected to increase significantly, it’s important to look at Vietnamese currency before and after the Vietnam war.
VIETNAMESE CURRENCY PRE-VIETNAM WAR
The following four historical events influenced the Vietnamese currency before the war with the United States:
- French Colonization
- The Democratic Republic of Vietnam
- Uncle Ho Money
- Liberation Dong
VIETNAMESE CURRENCY POST-VIETNAM WAR
After the war with the United States, Vietnam was once again reunified as a communist country. Vietnam now began to rebuild its economy after many failed attempts. As a result, the Vietnamese dong underwent an even more drastic change.
- US War Against Communism
- Unification of Vietnam
- Bank of Vietnam Money
Let us now take a closer look at all these historical events to get a broad picture of how the Vietnamese currency underwent numerous revaluations before it emerged in its current form as a currency that is now traded in the world’s basket of currencies in the foreign exchange market.
France controlled the lands of Vietnam, Laos, and Cambodia from the late 1880s until 1954, and this colonial empire was called L’Indochine française, or French Indochina.
French rule came to an in July 1954 end when General Vo Nguyen Giap, the leader of the Nationalist forces, defeated the allied French armies at Dien Bien Phu, a mountain outpost in northwest Vietnam.
Until the French were routed, the piastre was the popular monetary unit; but, to add to the monetary muddle, the Mexican coins and Dong Duong coins were also introduced. The Indochina Bank issued banknotes that depicted three girls that wore the traditional costumes of Vietnam, Laos, and Cambodia.
The Democratic Republic of Vietnam
After the Second World War, Vietnam got its independence. But French control continued even after the establishment of the Democratic Republic of Vietnam. In 1945, the Democratic Republic of Vietnam issued aluminum coins to replace the hodgepodge of currencies.
In 1947, the Vietnamese government issued Decree 48/SL. This established the circulation of banknotes with the face value of 1, 5, 10, 20, 50, 100, and 500 dongs. It also exchanged at par from Dong Duong banknotes to the Vietnam dong banknote.
On May 6, 1951, the new government established the National Bank of Vietnam. This central bank replaced the money issued by the Ministry of Finance back in 1947. Now one dong of the new paper note replaced 10 dong of the earlier banknotes. But this was not a smooth transition and took almost two years to complete.
Uncle Ho Money
From 1945 until 1954, the currency of the Democratic Republic of Vietnam used a portrait of Ho Chi Minh on its banknotes and was affectionately referred to as “Uncle Ho currency.” This new currency, issued in November of 1946, replaced the French currency, the Indochinese piastre. Later, in 1954, Ho Chi Minh overthrew French hegemony and four years later North Vietnam reunified Vietnam as a communist nation.
The Vietnamese currency exchange rate between and the Indochinese piastre and Uncle Ho money were as follows:
- Initially, one piastre was equal to one dong. They were exchanged at par.
- In 1951, the currency was reevaluated at a rate of 100 piastres to 1 dong.
- In 1958, another revaluation occurred at a rate of 1,000 piastres to 1 dong.
In 1953, the State of Vietnam, which was to become South Vietnam a year later, used two currencies: the French piastres and the South Vietnamese dong.
After the fall of Saigon on September 22, 1975, the currency of South Vietnam became the “liberation dong.” The exchange rate for 1 liberation dong was worth 500 of the earlier South Vietnamese dong.
US War Against Communism
The political transition from democracy to communism alarmed the United States. The Americans now stepped into the power vacuum vacated by France. In 1960, the US aligned with democratically-inclined South Vietnam to route communist rule in Vietnam.
After the fall of Saigon on April 30, 1975, the North Vietnamese army won a decisive victory against the United States and South Vietnam that ended the war.
Bank of Vietnam Money
On January 1, 1975, Vietnam was once again unified by the communist forces, and Vietnam remains a communist country today. The revolutionary government continued to honor the old currency used by the former regime until June 6, 1975, when Decree No. 04/PCT-75e established the National Bank of Vietnam led by Governor Tran Duong.
A new national currency referred to as “Bank of Vietnam Money” was launched on September 22, 1975.According to the new Vietnamese dong currency denominations, one dong of the new currency was worth 500 dong of the old one; and at that time, one dong was equal to one United States dollar.
Since then, there have been many Vietnamese dong currency revaluations, with new notes and artwork depicting the latest version. After the country was unified on May 3, 1978, so was the North Vietnamese dong and the South Vietnamese dong. Now 1 new dong was equal to one North Vietnamese dong and 0.8 South Vietnamese dong.
Then, on September 14, 1985, the communist government revalued the new dong. A new dong was now worth about 10 of the old dong. This discrepancy between the new and old dong triggered chronic inflation, a fiasco that repressed the value of Vietnamese currency for most of the 1990s.
Why Invest in the Vietnamese Currency?
If you’re looking for the best foreign currency investments in 2018, consider the Vietnamese dong as a long-term investment. The State Bank of Vietnam issued the dong on May 3, 1978, and today, a United States dollar is worth 20,850 dong.
The Vietnamese currency to USD exchange rate has interested foreign exchange investors because it’s inexpensive to buy a large amount of the Vietnamese dong with dollars. A significant gap between Vietnamese to US currency means an investor can make money by buying low today and selling the Vietnamese dong high tomorrow after the Vietnamese currency value resets. The primary reason to expect a Vietnamese currency evaluation is easy to understand. The country is experiencing an “economic miracle.”
In 1986, the Vietnamese economy was in a critical state. It had not experienced any improvements after the Vietnam war. Reviewing their failed economic policies, the leadership decided to change the economic model of the country. The government decided to move away from a planned economy to a socialist market economy.
The government gave up trying to control the direction of the economy after their ambitious five-year plan from 1976 to 1981 failed.
The economy remained stagnant in 7 key ways:
- The annual growth rates in industry and agriculture did not increase.
- The national income did not rise.
- The economies of North and South Vietnam could not be integrated.
- Production subsisted on a small scale.
- Unemployment remained high.
- Labor productivity stayed low.
- Material shortages stymied growth.
To jump-start the economy, the government encouraged people to start their own businesses. Small-to-medium enterprises began to mushroom all over the country. Although that decision seemed radical at the time for a communist regime, it worked out well.
Today, Vietnam has become a partner in globalization and a leading agriculture exporter in Southeast Asia. It has also made meaningful progress in technology and attracts large foreign capital investments.
How to Invest in Vietnamese Currency
Although the country has now begun to experience rapid growth, the current national currency is still cheap to buy with United States dollars. The simplest investment plan is to use a buy-and-hold strategy. This is a good currency for a long-term investment.
When you’re investing in Vietnamese currency, stay alert to the Vietnamese currency exchange to U.S. dollars by using a foreign currency converter. Also, stay up-to-date with Vietnamese currency news to recognize the best time to expect a Vietnamese currency revalue.
Before you purchase Vietnamese currency, use a Vietnamese currency conversion app to get the latest US to Vietnamese currency rates. You can track either the VND to USD exchange rate or the USD to VND exchange rate, either approach will work fine.
When exchanging money, it’s better to use a Vietnamese currency converter rather than relying on figures of the “latest” Vietnamese currency rate on a blog post. This is because the Vietnamese currency to US dollar rate constantly changes based on political and economic events occurring in both countries.
But don’t limit yourself to keeping track of Vietnamese currency conversion through a foreign currency Vietnamese Dong converter app alone. You should also use forums, podcasts, cash blogs, and financial journals to stay up-to-date on Vietnamese currency news.
This approach will give you a much better understanding of the Vietnamese currency exchange rate and the value of Vietnamese currency. You will also know when to reasonably expect a Vietnamese currency reset.
When you order Vietnamese currency, you can use your credit card or debit card to get an assortment of Vietnamese currency denominations for a small fee. Incidentally, you only need travelers’ checks, local currency, or coins if you need travel money in Vietnam to visit Ho Chi Minh City (formerly Saigon) or other Vietnamese cities.
Understanding Vietnamese Currency
Now that you have a better understanding of Vietnamese money, you may want to consider the benefits of the Vietnamese dong as an alternative investment if you’re looking for the best currency investments in 2018.
The reason why the Vietnamese currency is not easy to understand is because it has kept changing throughout the country’s history. This includes changes in name, value, dimension, color, denominations, and obverse and reverse images.
But that’s not all– the Vietnamese currency unit was divided into 10 hào, which, in turn, was divided into 10 xus. Today, both these monetary units are obsolete.
The only thing that has been stable since the State Bank of Vietnam issued the Vietnam dong has been the Vietnamese currency symbol. The Vietnamese dong currency symbol still remains “₫”.
Now that you understand the Vietnamese dong better, why it’s still underpriced and why its value is expected to go up, you may want to consider it as a long-term investment. Here at Treasury Vault, we will keep you updated on any changes in the Vietnamese dong and can help you purchase Vietnamese currency in denominations of your choice.