normala rashid Posted June 23, 2018 Report Share Posted June 23, 2018 tommy opinion I think you fail to understand the relationship between the Vietnamese dong and the US dollar. Although the dong is not freely convertible, it remains loosely pegged to the dollar in an arrangement known as a ‘crawling peg’. The USA is Vietnam’s top trading partner, so why would they jeopardise that foreign investment coming in by making it more expensive for them to buy Vietnamese goods? Fluctuations in Vietnamese inflation also alter the difference in the inflation rates of Vietnam and its trading partners. This will have an impact on the exchange rate of the two currencies. If Vietnam’s inflation rate exceeds that of its trading partner then there will be upward pressure on the real exchange rate. There would be a consequent deterioration of Vietnam’s competitive position, with all the subsequent negative effects on the economy. To prevent a rise in the real exchange rate, the dong has to depreciate relative to the foreign currency in order to reflect the inflation differential. However, since the beginning of 2013, the real exchange rates of the dong with the US dollar and the renminbi have both been larger than one. This means that Vietnam’s competitive positions in its bilateral export markets with China and the United States have deteriorated. To improve competitiveness, the SBV could tighten monetary policy to reduce inflation. Alternatively, it could allow its currency to depreciate faster. Both entail short-term pain and long-term gain. The SBV will likely justify this by saying that it is necessary to bring jobs to Vietnam in the age of globalisation. my opinion Iraq as big export of crude oil . Inflation will less faster than you expected. I have seen a once that cbi put 1.2 dollar rate in the website . I think iraq will make adjustments rate and delete 3 zero and reduce the rate and peg dollar to boost export . I really hope global currency reset could be happens and vietnam reinstant their currency . I will put my money in vietnam stock before gcr be happens . 2 Quote Link to comment Share on other sites More sharing options...
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