Vietnam Seeks Dong Stability as Dollar Nears Collapse

Economics, Premium POM

dong dollars

The article linked below is very telling of the last days of dollar dominance.  Vietnam itself is now openly expressing its concerns with the increase of “foreign currency loans” within the country.  The State Bank will not bail-out banks that have been dumping grounds for US dollar inflation.  As a top banker in Hanoi has stated:

“…the State Bank is not equipped to offer support to banks which run into problems with foreign currency liquidity.”

As the rest of the world moves away from dollar reserves Vietnam finds itself in the precarious situation of either allowing its tremendous economic growth and modernization to be stifled or to restructure its own M1 money supply and strengthen the dong for its own regional economic uses.

China, by moving away from the US dollar in trade, is forcing other regional countries, like Vietnam, to adjust to the emerging economic realities of a world without dollar hegemony.

At some point in the very near future Vietnam will support the dong with gold reserves and the Shanghai Gold Exchange will set a new price for the precious metal.  The dong, for its part, will be revalued to support its continued economic growth and integration within the larger Asian economic zone.

Other interesting quotes from the article:

“The low dollar interest rate obviously has made dollar loans more attractive.”

“The director of a major bank in Hanoi said he received a report indicating that the foreign currency loans of the whole banking system in the first half of 2014 surged by 10 percent over the end of 2013, but that the mobilized capital growth rate was negative during the same time.”

“The State Bank has admitted to high risks for the national economy when businesses continue to prefer foreign currency loans.”

The full article can be read at:

Time Bomb Laid in Foreign Currency Market

Also see from philosophyofmetrics:

Why the Vietnamese Dong Will Reset

The American Dollar is Dumping Vietnam

The New Exchange Rate System

SDR Supplemental: VND or VNN? IQD or IQN?