Vietnam Dong and Gold Rate Dynamics: Currency Instability and Safe-Haven Demand in Emerging Markets

In the volatile landscape of emerging markets, the interplay between currency instability and safe-haven demand has become a defining feature of investment strategies. Vietnam's experience in 2024–2025 offers a compelling case study, where the Vietnamese Dong (VND) has faced relentless depreciation against the US Dollar (USD), while gold prices have surged to record levels. This dynamic reflects broader global trends, including geopolitical tensions, monetary policy shifts, and the enduring appeal of gold as a hedge against economic uncertainty.

Currency Instability: The VND's Struggle Against the USD

The VND's exchange rate has deteriorated sharply in 2024–2025, with the USD/VND midpoint climbing from 25,058 to 26,209—a 4.6% appreciation in six monthsIs gold worth considering amidst Vietnam’s dynamic market landscape^[4]. By September 2025, the rate had reached 26,400, with forecasts predicting further increases to 26,537.28 in 12 monthsGold Price History Vietnam 2025: VND Gold Prices - Exchange Rates^[1]. This depreciation is driven by multiple factors:
- Global Dollar Strength: The US Dollar Index (DXY) exceeded 108.6 points in 2025, fueled by the Federal Reserve's limited interest rate cuts and a sluggish global economic recoveryGold in Various Emerging Market Currencies, 2024^[2].
- Domestic Pressures: Vietnam's inflation rate hit 3.12% in April 2025, surpassing the central bank's 3% targetIs gold worth considering amidst Vietnam’s dynamic market landscape^[4]. Simultaneously, US trade policy uncertainties—such as proposed tariffs on Vietnamese exports—intensified market jittersIs gold worth considering amidst Vietnam’s dynamic market landscape^[4].

The State Bank of Vietnam (SBV) has attempted to stabilize the currency through interventions like foreign currency sales and forward contractsGold in Various Emerging Market Currencies, 2024^[2]. However, analysts argue that structural challenges, including a reliance on USD-denominated imports and a trade deficit, will likely keep the VND under pressureWhat will affect the USD/VND exchange rate in 2025?^[6].

Gold as a Safe-Haven Asset: Vietnam's Unique Case

The VND's weakness has directly inflated domestic gold prices, which surged 31.08% year-over-year in 2025Gold Price History Vietnam 2025: VND Gold Prices - Exchange Rates^[1]. By June 13, 2025, 24K gold reached 89,530,083 VND per ounce—a 34% increase from January 2025 levelsGold Price History Vietnam 2025: VND Gold Prices - Exchange Rates^[1]. This trend mirrors patterns in other emerging markets, where currency devaluation and inflation have driven gold demand:
- Nigeria: Gold prices rose 121.5% in 2024 amid the Naira's collapse and dollar shortagesGold in Various Emerging Market Currencies, 2024^[2].
- Egypt: A 109.1% increase followed the Egyptian pound's 50% devaluation after an IMF-driven currency floatGold in Various Emerging Market Currencies, 2024^[2].

In Vietnam, gold's appeal is amplified by cultural significance and its role as a store of value. As Dr. Dao Le Trang Anh from RMIT Vietnam notes, global uncertainties—such as the Russia-Ukraine war and US elections—have heightened demand for gold as a safe-haven assetIs gold worth considering amidst Vietnam’s dynamic market landscape^[4]. Meanwhile, the US Federal Reserve's rate cuts and a weaker dollar have made gold more affordable for Vietnamese investorsIs gold worth considering amidst Vietnam’s dynamic market landscape^[4].

The Gold Premium: A Disconnect from Global Benchmarks

Vietnam's domestic gold market has diverged sharply from global prices. As of September 2025, the local price for gold was 17% higher than international levelsGold Price History Vietnam 2025: VND Gold Prices - Exchange Rates^[1]. This premium is attributed to:
- Supply Constraints: Limited availability of gold bullion and a state monopoly on gold productionHigh gold prices increase level of risk in Vietnam: RMIT expert^[5].
- Speculative Behavior: Investor preference for SJC gold (a locally traded standard) and hoarding during periods of uncertaintyCurrency Fluctuations and Their Correlation with Gold Prices^[3].
- Policy Interventions: Directives like 1426/CĐ-TTg (2023) and 64 (2025) aim to narrow the price gap but have had limited successGold Price History Vietnam 2025: VND Gold Prices - Exchange Rates^[1].

The government faces a delicate balancing act: stabilizing the VND without stifling export competitiveness or exacerbating inflation. Analysts suggest amending Decree No. 24/2012/NĐ-CP to liberalize gold bullion markets could reduce the premiumHigh gold prices increase level of risk in Vietnam: RMIT expert^[5].

Geopolitical and Policy Risks: A Looming Shadow

The VND-gold dynamic is further complicated by geopolitical risks. For instance, initial fears of a 46% US tariff on Vietnamese exports in mid-2025 pushed gold prices to 73.64 million VND per ounce—a 48.6% spike from June 2024 levelsIs gold worth considering amidst Vietnam’s dynamic market landscape^[4]. While the tariff was later reduced to 20–25%, the episode underscored how trade policy shifts can amplify gold volatilityIs gold worth considering amidst Vietnam’s dynamic market landscape^[4].

Looking ahead, analysts warn that Trump's potential 2025 tariff policies could reintroduce uncertainty, with the USD/VND rate potentially fluctuating within a 3% rangeWhat will affect the USD/VND exchange rate in 2025?^[6]. Additionally, the SBV's interventions may struggle to counteract long-term trends, as forecasts suggest a 16% increase in the USD/VND rate by mid-2029Currency Fluctuations and Their Correlation with Gold Prices^[3].

Investment Implications and Strategic Considerations

For investors, Vietnam's VND-gold dynamics highlight both risks and opportunities:
1. Currency Hedging: Given the VND's vulnerability, investors may prioritize hedging strategies to mitigate exchange rate risks.
2. Gold Allocation: The surge in gold demand underscores its role as a hedge against inflation and currency depreciation, particularly in markets like Vietnam where premiums are high.
3. Policy Monitoring: Reforms to Decree No. 24/2012/NĐ-CP and the SBV's monetary policy decisions will be critical for market stabilityHigh gold prices increase level of risk in Vietnam: RMIT expert^[5].

In conclusion, Vietnam's experience illustrates the complex interplay between currency instability and safe-haven demand in emerging markets. As global uncertainties persist, gold is likely to remain a cornerstone of investment portfolios, while the VND's trajectory will depend on both domestic policy and external shocks.