CHANGE IN VIETNAM EXCHANGE POLICY

IN DOI MOI PERIOD AND ITS IMPACT ON

VIETNAM ECONOMY

Group 19
Members

Đỗ Như Ngọc - 1617720041 - 64

Lê Minh Phát - 1511110627 - 74
Hoàng Thị Thu Trà - 1615510112 -
93
ABSTRACT
INTRODUCTION

1.Research purposes
2.Scope and object of the study
- Scope of research
- Subject of research
3. Methodology
4. Structure
Chapter I: Background of the Vietnam Economy
and changes in Exchange Rate Policy In Doi Moi
in Vietnam.
Chapter II: Our evaluation in exchange rate
policy in Doi Moi Period in Vietnam.
Chapter III: Some solutions to improve the
exchange rate effectiveness of the State Bank
of Vietnam in the context of international
economic integration
CHAPTER 1: BACKGROUND
1.1. HISTORY BACKGROUND

1.1.1. Vietnam Economy before 1986

• In 1978, Vietnamese government issued new
currency of Vietnam Dong (VND)
• Family economy and collective economy were
encouraged while capitalist economy was
restrained.
• Foreign trade and assistance were mainly
depended on Soviet Union and its socialist
allies.
1.1. HISTORY BACKGROUND
The Vietnamese economy was on the verge of
collapse
Per capita income stood at $101; it decreased
to $91 in 1980 and then increased to $99 by
1982
An estimated 6,000,000 Vietnamese were
suffering from malnutrition
Inflation reached the peak rate of 453.5% in
the year of 1986
1.1. HISTORY BACKGROUND

1.1.2. Vietnam Economy in Doi Moi

The Sixth Congress of the Vietnamese Communist Party
(December 1986) marked a significant turning point in
the transformation of the Vietnamese economy
an open, market-oriented, and globally
integrated model
Aims of these reforms
 Eliminate the state-
subsidized mechanism.
 Encourage and stimulate the
development of private
organizations, individuals,
and economic sectors.
 Make the best use of potential
resources for the development
of production and commodity
exchange.
 Enact policies for the
integration of Vietnam into
the world and regional
economies.
 Speed up foreign trade
activities and encourage
foreign direct investment
(FDI).
 Combine administrative reform
with the renovation of
economic policy.
 Strengthen state management
and macro regulation.
 Combine economic growth with
general social development to
stabilize politics and
“maintain socialist targets.
1.2. Major changes in Exchange Rate
Policy in Doi Moi Period in Vietnam
1.2.1. Before 1989
 Before 1989: administered exchange rate regime under
a centrally planned economy.
 an official rate for foreign trade transactions
 another for non-commercial transactions
 a so-called internal settlement rate for the purpose
of compensating export enterprises for their losses
 a separate rate for remittances received from overseas
1.2. Major changes in Exchange Rate
Policy in Doi Moi Period in Vietnam
1.2.2. After 1989
In March 1989: a single official rate
Set and announced by the State Bank of Vietnam
(SBV)
Commercial banks were allowed to determine
their buying and selling rates within a band of
+/-5 per cent around the announced official
rate, with a maximum bid-ask spread of 0.5 per
cent
CHAPTER 2: THE EVALUATION IN
EXCHANGE RATE POLICY IN
DOI MOI PERIOD IN VIETNAM
2.1. Positive Impacts
2.2. Negative Impacts
CHAPTER 3: SOLUTIONS TO
IMPROVE EXCHANGE RATE
POLICY IN VIETNAM
3.1. Discount Policy
3.2. Exchange Rate Policy
3.3. Price Stabilization Reserve Fund
3.4. Currency Devaluation
3.5. Currency Appreciation
Conclusion
The exchange rate policy is an integral part of the
national monetary policy, is the macro management tool
of the State for the economy, especially foreign
economic activities. In line with the economic reform
process since the late 1980’s, Vietnam’s exchange rate
policy has gone through two main phases as the economy
became more market oriented. Before 1989, Vietnam
adopted an administered exchange rate regime under a
centrally planned economy. In March 1989, the multiple
exchange rates were unified into a single official rate,
set and announced by the State Bank of Vietnam (SBV).
These change had an significant influence on Vietnam
Economy.