The gold standard broke down after First World War as central banks increasingly issued currency not tied to gold or changed the price of gold so more money could be created. As a result, many nations left the gold standard during the Great Depression of the 1930s. The gold standard mechanism led to more changes in output and employment than in prices. Industrialization increased, and prices became less flexible. Thus, the gold standard system was self-regulating. This situation tended to reduce trade imbalances. Therefore, instead of unemployment, prices in the country with the shrinking money supply would fall, and prices and wages in the country with high exports would rise. That meant the money supply in the country with high imports shrank, and the money supply in the nation with high exports grew. If a nation had an import surplus and no capital inflow to pay for surplus imports, the government literally shipped chests of gold coins to the nations that it had to pay. Much of the money in circulation was gold, or paper currency backed directly by gold. In the 19th and early 20th centuries, many nations were on the gold standard, and most nations fixed their currencies relative to gold. If supply grows relative to demand, the price drops. The market for a currency is much like any other. In this paper, we review the theory of currency management, discuss how Vietnam and other developing Asian nations have recently managed their currencies and suggest alternatives for Vietnam for dealing with the US, an important market. Currency appreciation would also have some, but perhaps not a major, impact on exports of assembled products. Allowing the dong to appreciate (grow in value compared to the dollar) would hurt many farmers unless the Vietnamese government supported them through the central budget which is under strain. Vietnam has to decide how to negotiate its trade relations with the US. Ironically, these clauses are in the Trans-Pacific Partnership (TPP) that the US negotiated with other nations but then decided not to enter. ![]() The new Biden administration will not have the same focus on bilateral trade deficits as its predecessor but has appointed many officials associated with labor unions favoring protection and insisting on environmental and labor clauses in trade treaties. However, the real value of the dong has been stable against the dollar since 2015, and in 2015, Vietnam had an overall trade deficit. That is, the Treasury argues that the Vietnamese dong has been held at “too low” a level to artificially boost Vietnam’s exports. This led the US Treasury to find that Vietnam is a “currency manipulator” and giving an unfair advantage to the country’s exports. Recently, Vietnam’s trade surplus has been increasing, particularly with the United States. Vietnam’s exports have grown rapidly and are now larger than its national output. ![]() The full terms of this license may be seen at Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. This article is published under the Creative Commons Attribution (CC BY 4.0) license. Converting USD to VND costs just 0.65% with Wise - making this by far one of the cheapest ways to get your hands on travel money for Vietnam.Published in Fulbright Review of Economics and Policy. It’s free to open a Wise account, with a one time fee of 9 USD for the Wise debit card. You can also withdraw dong from an ATM whenever you need them - giving you the safety of spending with a card, and the convenience of cash. ![]() And if not, the card can simply auto-convert your money at the real rate, for a small fee. Spending on the card will use the local currency if you have it in your Wise account - no matter where in the world you are. The Wise travel money card is likely to get you a better dong exchange rate and lower fees compared to your bank. Top up your card balance in dollars and convert those dollars to dong to spend in stores and restaurants, or withdraw cash from ATMs when you need it. Travel money cards are a safe and convenient way to spend in Vietnamese dong (VND) - and if you pick the right one they could help you save on currency conversion, too. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |