Vietnamese Dong (VND)
Vietnam’s official currency
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What is the Vietnamese Dong (VND)?
The Vietnamese Dong refers to Vietnam’s official currency and is represented by ISO code VND. The word “dong” implies money in Vietnamese; it means adding the word after a country’s name would refer to any currency. For example, the U.S dollar will become the U.S dong, and hence, the currency of Vietnam appears as the Vietnamese dong.
VND replaced the earlier currency hao in 1978, which was equivalent to one-tenth of VND. At some point, VND was sub-divided into hao, but since hao is no longer accepted legal tender, the dong is considered the smallest unit of the currency. VND is issued by the State Bank of Vietnam and suffers heavily from inflation.
Summary
- The Vietnamese Dong refers to Vietnam’s official currency and is represented by ISO code VND.
- In 2003, Vietnam started replacing the cotton notes with plastic polymer notes, arguing that it would cut the printing costs.
- The State Bank of Vietnam also supports monetary stability and regulates all corporate banking operations.
History of the Vietnamese Dong
The North Vietnam government, previously known as the Viet Minh, introduced dong as its currency in 1946, which replaced the French Indochinese piastre. The currency was revaluated in 1951 and 1959 at the rate of 100 to 1 and 1000 to 1, respectively. Similarly, the South Vietnam currency was also dominated by piastre notes, which was replaced by dong in 1953. The capture of Saigon in 1975 led to the change in the name of the South Vietnam currency to liberation dong, which was equivalent to 500 old dongs.
The unification of Vietnam led to the introduction of one dong in 1978. The one new dong was equivalent to 0.8 Southern dong or one Northern dong. VND was revalued on September 14, 1985, and the new dong was valued at 10 old VND. It began a period of continued inflation that lasted for most of the early 1990s.
The State Bank of Vietnam issued notes in 1978 in denominations of 5 hao, 1 dong, 5 dong, 10 dong, 20 dong, and 50 dong notes. The 2 VND and 10 VND notes were introduced in 1980, followed in 1981 by 30 VND and 100 VND notes. The notes were withdrawn in 1985 when, because of inflation and economic uncertainty, they gradually lost value.
In 1985, notes in denominations of 5 hao, 1 VND, 5 VND, 10 VND, 20 VND, 50 VND, 100 VND, and 500 VND were introduced. Since inflation was persistent, the first notes were followed by notes in denominations of 200, 1,000, 2,000 and 5,000 in 1987, 10,000 and 50,000 notes in 1990, 20,000 in 1991, 100,000 in 1994, 500,000 in 2003, and 200,000 in 2006. Currently, banknotes with denominations of 5,000 VND are no longer circulated.
Current Vietnamese Dong
Except for the last series introduced in 2003, all the earlier ones often confused users and lacked coordination in the designs and unified themes. On June 7, 2007, the government ordered the termination of the production of cotton notes of denomination of 50,000 VND and 100,000 VND. By September 1, 2007, the notes were no longer in circulation.
In 2003, Vietnam started replacing the cotton notes with plastic polymer notes, arguing that it would reduce printing costs. Several newspapers in the country opposed the reforms, citing printing defects and suggesting that the printing contracts benefitted the State Bank of Vietnam governor’s son.
With the 2003 series of notes replacing the old notes of the same denominations, the 200 VND, 500 VND, 1000 VND, 2000 VND, and 5,000 VND notes made of cotton polymer are now commonly distributed and generally recognized.
Currently, banknotes in denominations of 100 VND, 200 VND, 500 VND, 1,000 VND, 2,000 VND, 5,000 VND, 10,000 VND, 20,000 VND, 50,000 VND, 100,000 VND, 200,000 VND, and 500,000 VND are in circulation in Vietnam.
In addition to circulating banknotes, the State Bank of Vietnam supports monetary stability, regulates all corporate banking operations, and formulates fiscal policies in Vietnam. It also issues government bonds and controls the country’s financial reserves.
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