Essays on Vietnam’s Exchange Rate Policy

Abstract

This thesis is motivated by the fact that the limitations and shortcomings of Vietnam’s exchange rate policy have been revealed some 30 years after the implementation of the Doi Moi program. This is one of the country’s most important macroeconomic policies, playing a significant role in the development of its economy. The thesis is structured in 6 essays, which cover the main characteristics of the Vietnamese foreign exchange market and exchange rate policy, as follows. Firstly, this thesis explores the issue of the parallel foreign exchange market, which has created several complications for the State Bank of Vietnam (SBV) in its attempts to manage the foreign exchange market and the official exchange rate. Fluctuations in the parallel market rates affect the level of international reserves, the position of the economy and the public’s portfolio decisions. An analysis of this market indicates that the official exchange rate, income, and domestic price relative to the world’s prices are the important factors in determining the exchange rate in the parallel market.