VietNamNet Bridge – Vietnamese people tend to use VND instead of dollars in their transactions, and keep VND under the pillow as the dollar is devaluating on the domestic market.
Dollar disappearing from price quotation board
Under current laws, all transactions in Vietnamese territory must be carried out in VND. However, nobody thinks that they have to follow the regulation. Manufacturers still quote prices in dollars for products and services, from cars, hotel room rates, tour fees to computer mouses and memory cards. Inspections by state management agencies have not helped, and everybody is ignoring the regulation. Experts many times have warned about the serious dollarisation in Vietnam.
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Many producers still use the dollar in payment, which can bring benefit to customers. The price of a Toyota Innova remains unchanged at $29,900 since the model was launched onto the market. If buying the car at the end of 2006, customers had to pay VND481mil, but now they pay VND474mil. |
But the dollarisation level is suddenly decreasing. A lot of manufacturers have decided not to quote prices in dollars any longer, replacing them with prices in VND. Computer distributors, who always quoted prices in dollars to be sure that they had a hold over buyers, have also changed their business strategy by quoting in VND. Clients have even asked computer sellers to quote prices in dollars as they did previously, because they don’t want to pay more money.
It is understandable why sellers always quoted prices in dollars. As the dollar was believed to keep increasing in value, the quotation in dollars can help protect sellers from the risks from the VND devaluation. Nowadays, as the VND keeps revaluating, sellers quote prices in VND to protect themselves from the dollar devaluation.
A printer now has the quoted price of VND10.31mil instead of $650, and a computer screen at VND6.5mil instead of $410. Some computer shops quote prices in both dollars and VND, but with the exchange rate beneficial to the sellers. For example, a computer mouse has the quoted prices of $10 and VND159,000, which means the exchange rate at VND15,900/US$1, while the official exchange rate announced by commercial bank is at VND15,860/US$1, and the rate on the black market is VND15,570/US$1 only.
Which one to keep, VND or dollar?
Huong, who leases apartments at Phu My Hung urban area, sets the leasing fee in dollars and asks her clients to pay monthly leasing fees in dollars. Payment in VND is accepted with the reference to the exchange rate applied by Vietcombank. Huong complains that she has lost a lot of money since the dollar began decreasing in value.
Huong said she expects that a candidate of the Democratic Party, no matter Clinton or Obama, will become the US President. If so, the dollar will increase in value again.
T., the owner of a computer accessories shop, said that Vietnam, like China, will see the dollar devaluate further. It is clear that it is not beneficial to keep dollars in hand now, and he has decided to make transactions in VND.
“I once thought that the dollar was No1, but now I need to change my mind,” he said.
Meanwhile, Sinh, a car trader, feels discontented that the state does not take actions to keep the exchange rate stable to protect businessmen. However, Sinh said that he would ‘give up’ the dollar and hold VND.
A lot of people, who have dollars deposited at banks, are considering selling dollars to get VND and make deposits in VND. The dollar devaluation has been making their assets shrink, while they can get very low interest rates with dollar deposits, which are just equal to a half of the interest rates of VND deposits (6% vs. 12% per annum).
(Source: Tuoi tre) | 
