Why Is The Vietnam Currency Is Low?
The currency of Vietnam is regarded as one of the lowest in the world today. Part of the reason is due to the economy itself and its ability to compete in a worldwide marketplace. If you choose to live in Vietnam, you may realize that this is one of the most affordable places that you can live. Whether you choose to live in Hanoi or Ho Chi Minh, you can survive there even on a moderate monthly income. Let’s discuss why the Vietnam currency is currently so low and quickly rectify it.
Comparing Vietnam Currencies To The American Currencies
If you are from the United States, it might be good to understand how the American currency compares to that which is in Vietnam. For example, if you only made $500 a month, you could survive there and do so in a very lavish way. The reason for this divergence in currencies is the exchange rate. The Vietnamese Dong is the second weakest currency in the world, just under the Iranian Rial.
Why Is There Such A Difference Compared To Other Currencies?
If you go through a list of lowest currencies, one of the primary reasons for this problem is how relatively new Vietnam is in the global marketplace. It only entered into global markets back in the 1980s. Since it has only been just over 30 years, it is relatively new compared to all other South Asian markets. Therefore, from investors’ standpoint, they are likely to use and support an older currency, and a much more robust economy supports that.
Vietnamese Regulations And Their Government
Another problem that Vietnam has compared to the rest of the world is how regulations and their government conduct business. The private sector encompasses more than 50% of the economy, which essentially alienates it from receiving investments. There is also quite a bit of government control, and because of this, investors are very leery of investing in a country that does not seemingly advocate for free-market values.
The Prominence Of Corruption And Bureaucratic Issues
As with most countries that the government primarily controls, this paves the way for government regulations that favor those in power and not the people. Vietnam, despite its improvements over the decades, is still rampant with corruption. Projects that have started have ended suddenly, and because of that, money has been lost, and their reputation for inconsistency has spread worldwide. Therefore, when looking at the Vietnamese Dong from this perspective, you can see why it is not making any progress toward becoming more valuable.
The Printing Of Notes
If you want an economy to fail, or if you’re going to devalue the currency of any nation, all you have to do is continue to print money that has no substantial back in. This is the most apparent reason why the Vietnamese currency. As the government continues to print more money, the supply is there, but it has no value than other global currencies. This causes depreciation of the currency, which is why you can exchange very little money in Vietnam and have so much. A single US dollar is valued at nearly 24,000 VNDs. This means that this massive rise is not matched at all with the overall increase in demand.
How To Fix The Problem
If you combine all of this and the Vietnamese government discouraging imports, you can see why this currency is so devalued. However, from the standpoint of a person visiting Vietnam, from virtually any other country, you will have so much more money when you visit there. Until Vietnam becomes more capitalistic and embraces the idea of importing goods, it will likely remain this way. It would also be helpful if the government would loosen its controls and regulations on the people and its interactions with the rest of the world to help boost its economy. By making these changes, they would be able to start improving the value of their currency. This does not seem to be an option in the foreseeable future until the revolution occurs or the government in power begins to trade more openly.
Vietnam is one of the most beautiful places in the world. It would be a literal Mecca for people that enjoy the most exotic locations. They could boost their economy by simply inviting more businesses to create hotels, restaurant chains and embrace modern capitalism. However, this would take from the power of those in charge right now, so this progress is at a standstill. If they could see that importing goods and inviting the rest of the world to their country would be beneficial, they could become a much larger player in the world economy and help improve life for their people.
