VND (Vietnamese Dong): What it is, How it Works

What Is the VND (Vietnamese Đồng)?

The term VND refers to the currency abbreviation for the Vietnamese dồng. The dồng is the national currency for Vietnam, which replaced the use of separate North and South Vietnamese money in 1978. The dồng is considered an exotic currency because of the lack of interest in it on the forex market or in global finance. Until 2016, it was loosely pegged to the U.S. dollar through an arrangement called a crawling peg.

Understanding the VND (Vietnamese Đồng)

VND, short for the Vietnamese đồng, is often presented with the symbol ₫. It is issued by the State Bank of Vietnam, which issues banknotes in 100, 200, 500, 1,000, 2,000, 5,000, 10,000, 20,000, 50,000, 100,000, 200,000, and 500,000 denominations. A single đồng is composed of of 10 hào and 100 xu, neither of which is used in Vietnam. The bank minted coins in 200, 500, 1,000, 2,000, and 5,000 đồng denominations. The issuance of the coins was a step to improve the monetary system in line with the international practices. Some cotton paper banknotes are still being circulated simultaneously with the new set of money.

The currency was established in 1946, when the Viet Minh government, which later became the government of North Vietnam, introduced national money to replace the French Indochinese piastre. The State of Vietnam, which later became South Vietnam, issued its own money in 1953. These banknotes listed in the price in both đồng and piastres, reflecting its transition. After the fall of Saigon in the mid-1970s, South Vietnam issued the liberation đồng. The đồng was reunified in 1978 after Vietnam itself was reunified in the late 1970s.

The Vietnamese đồng, which is closely managed against the U.S. dollar, has been marked by chronic inflation. It is one of the poorest currencies worldwide according to the global currency market. Throughout the 2010s, one U.S. dollar traded for around 19,500 Vietnamese đồng. One U.S. dollar was equal to roughly 23,631 VND on June 29, 2023, based on the exchange rate.

Vietnam has moved from an agricultural economy to a hub for electronics manufacturing and assembly, particularly with a large investment by Korea's Samsung Electronics. This means the economy has grown exponentially and is one of the fastest-growing in the world. Furthermore and according a Bloomberg report, while other Asian currencies such as the Thai baht (THB) and the Malaysian ringgit (MYR) surged, and the Philippine peso (PHP) dropped in value, the đồng is little changed and therefore one of the most stable Asian currencies.

Special Considerations

The word "đồng" is used in the Vietnamese language as a term for any currency, modifying it appropriately with the country's name before it. So, for example, someone living in the United States who is fluent in Vietnamese may refer to the U.S. dollar as the "U.S. đồng.” Additionally, "U.S. hào" and "U.S. xu" can be used in reference to the U.S. dime and penny coins. So, using the word “đồng” alone to refer to Vietnam’s currency will not suffice. Vietnamese đồng must be referred to as "đồng Vietnam."

The Bottom Line

VND is the abbreviation for the Vietnamese đồng, Vietnam's national currency. It was established in 1946 to replace the French Indochinese piastre. In 1978, the Vietnamese đồng replaced the use of separate North and South Vietnamese money. The Vietnamese đồng is managed by the State Bank of Vietnam through a crawling peg to the U.S. dollar. As of June 26, 2023, 1 USD equals 23,537.722129 VND.