Vietnam Dong Declines to Record Low Against US Dollar

The Vietnamese Dong (VND) has reached a record low against the US Dollar (USD) in recent months, raising concerns about the country's economic stability and the potential impact on businesses and consumers. The depreciation of the VND has been driven by several factors, including US dollar strength, inflation, and trade imbalances. This article explores the implications of the VND's depreciation on inflation, consumer prices, and the purchasing power of the Vietnamese population, as well as the strategic adjustments businesses can make to mitigate potential losses.



The decline in the VND can have significant implications on inflation, consumer prices, and the purchasing power of the Vietnamese population. A depreciating VND makes imports more expensive, as they are typically priced in foreign currencies. This increased cost of imports can lead to higher prices for goods and services in Vietnam, contributing to inflation. For instance, in 2022, the USD/VND exchange rate increased by about 0.6% in the first 4 months, which could have put upward pressure on inflation (VNDirect, 2022).

Higher import prices can feed into domestic prices, raising the cost of local products and contributing to inflationary pressures. This can lead to an increase in consumer prices, making goods and services more expensive for Vietnamese consumers. For example, in 2022, the consumer price index (CPI) in Vietnam increased by 3.18% year-on-year, with food and energy prices being the main drivers (General Statistics Office of Vietnam, 2022).

A depreciating VND reduces the purchasing power of the Vietnamese population, as their income in VND buys fewer goods and services. This can lead to a decrease in living standards and a potential increase in poverty rates. For instance, in 2021, the poverty rate in Vietnam was estimated to be around 6.1%, and a depreciation of the VND could exacerbate this issue (World Bank, 2021).

To mitigate these effects, the State Bank of Vietnam may need to consider adjusting interest rates to stabilize the exchange rate and maintain economic stability. However, raising interest rates could counteract policies aimed at supporting businesses, as higher borrowing costs would increase the financial burden on companies, impacting their development and production capacity (Nguyen Tri Hieu, 2025).

Businesses can take strategic adjustments to mitigate potential losses from the depreciation of the VND. These include diversifying supply chains, improving productivity and efficiency, hedging against currency fluctuations, negotiating better terms with customers, and seeking government support. By implementing these strategies, businesses can better navigate currency fluctuations and maintain their competitiveness in international markets.

In conclusion, the depreciation of the VND can have significant implications on inflation, consumer prices, and the purchasing power of the Vietnamese population. It is crucial for the Vietnamese government to develop specific scenarios to prepare for upcoming fluctuations and implement monetary policy adjustments to maintain economic stability and protect domestic purchasing power. Businesses should also take strategic adjustments to mitigate potential losses and maintain their competitiveness in the face of currency fluctuations.