Vietnam dong investment: a favourable monetary policy for foreign investors
A Vietnam dong investment is now possible thanks to the foreign exchange market being opened up. The State Bank of Vietnam encourages investors to invest in Vietnamese dong, through a flexible monetary policy, to reduce inflation.
Vietnam dong investment: Guidelines for foreigners
The currency code for Vietnamese dong is VND and the symbol is ₫. Currently the exchange rate is about 22,300 VND to 1 USD. An investor has 4 main ways to exchange currency in to VND:
- Use cash: A relatively limited solution that does not allow large investments. Currency is exchanged in jewellery stores or banks
- From ATMs in Vietnam: The maximum withdrawal from an ATM is 10 million VND or $448.3, which severely limits the amount of investment
- Western Union
- Open an account at a bank in Vietnam and make an international bank transfer: The simplest solution is to go for 2 accounts in Vietnam, one in the original currency, in which the investor will receive the money, and one in Vietnamese dong, where it will do the conversion. Vietnam does not use the IBAN system. The investor will have to make sure that it has the account SWIFT code. If the beneficiary does not have a bank account in the country where it is located, it may consider relying on the bank network. If the bank has no branches in Vietnam it is possible to make use of a service provider specialized in fund transfers. Thus, a transfer of funds online is possible. The beneficiary must present an ID in person in order to withdraw money. In principle, the payer pays the costs of the transfer and the recipient’s collection costs, but the payer can give instructions to the contrary.
Monetary policy aimed at reducing inflation
Monetary policy in Vietnam creates favourable conditions for vietnamese dong investment.
The State Bank of Vietnam issued, early in 2016, a directive on monetary policies. The latter’s objective is an inflation rate of less than 5% and a GDP growth of 6, 7%. This will stabilize the currency market and enhance the value of the Vietnamese dong in order to stimulate growth.
The State Bank of Vietnam also asked credit institutions to facilitate access for household and business loans while maintaining credit quality. The State Bank of Vietnam therefore plans to implement enhanced monitoring to ensure the security of the national monetary system and ensure an increase in the volume of loans, while avoiding an increase in bad debts. The loan ratio should be kept below 3%.
Finally, in 2015, the money supply increased by 13.55% compared to the previous year, ensuring stabilization of the foreign exchange market and control of inflation. Producers and traders now benefit from a low interest rate on their loans and an increasing deposit rate.
Investing in Vietnamese dong is therefore proving to be a real opportunity for foreign investors, who must nevertheless keep an eye on inflation of the dong. This inflation is kept in check through monetary policy favourable to foreign investment.
Vietnamese-Attorney.com advises you when investing in Vietnamese dong. Ask online for a free no-obligation quote.