return icon Vietnamnet.vn

In competing with China, weak VND policy will not help

VietNamNet Bridge - Economists have repeatedly advised the government not to rely on a weak dong policy when trying to compete with Chinese products as demand in China is falling.

VietNamNet Bridge - Economists have repeatedly advised the government not to rely on a weak dong policy when trying to compete with Chinese products as demand in China is falling.

 


{keywords}

Dr. Luu Bich Ho, former head of the Development Strategy Institute, said the weak dong should not be the major solution to competition with China.

Ho warned that this was not a method Vietnam should continue to apply.

“The dong devaluation will help ease exporters’ difficulties, but we cannot devalue further because of the problems that could arise in the national economy,” Ho said, adding that the sharp dong devaluation will increase inflation.

He went on to say that the weak local currency policy will not work once demand is low.
Agreeing with Ho, an analyst said technical solutions would not help much. Meanwhile, purchasing power has decreased in China.

“Even if Vietnamese exporters try to lower the prices, they will fail to boost exports to the market where the demand is low,” he said.

The analyst warned that continuing to devalue the dong may do more harm than good, because Vietnam needs to import input materials for domestic production from China. 

As the dong has weakened, the imports have become more expensive, putting a heavier burden on Vietnamese businesses.

Dr. Tran Dinh Thien, head of the Vietnam Economics Research Institute, said Vietnam should weigh the pros and cons, both short and long term, before making any adjustments to the foreign exchange rate.

In the short term, the dong devaluation will help boost exports and reduce the trade gap with China.

However, this will not benefit Vietnam in the long term, because it may become more reliant on China as a supplier of low-cost products.

But Thien believes Vietnam should peg the dong firmly to the US dollar. If the dong is overvalued, this will hinder exports and put pressure on foreign exchange, and even threaten the stability of the forex market.

Pham The Anh from the Hanoi Economics University said the current exchange rate, after the latest dong devaluation, truly reflects market supply and demand, but in principle, Vietnam still insists on a dong-pegged-to-the-dollar policy.

Anh, who has conducted research with Dinh Tuan Minh from the same school, thinks that a floating dong policy with the state’s management would be the best choice for Vietnam now. A completely floating policy would put Vietnam at risk because of the openness of the economy and the incomplete finance system.

Kim Chi

MORE NEWS

Former State President Nguyen Xuan Phuc explains his resignation

Former President Nguyen Xuan Phuc decided to resign and retire as he was fully aware of his responsibilities before the Party and the people when a number of officials under him committed violations during his stint as prime minister in 2016-2021.

Vietnam remains third largest seafood supplier to RoK

The nation remained the third largest seafood supplier to the Republic of Korea (RoK) last year with the country’s seafood market share as part of the RoK’s total imports reaching 10.2%, according to statistics released by the Korea Customs Service.

Airline agencies asked to tighten control over smuggling by air

The Civil Aviation Administration of Vietnam (CAAV) has asked agencies under its wing to strengthen inspection and supervision to promptly detect and handle smuggling by air.

Vietnamese FM meets Cambodian, Philippine, Malaysian counterparts

Foreign Minister Bui Thanh Son met with his Cambodian, Philippine and Malaysian counterparts on February 3 on the sidelines of the 32nd ASEAN Coordinating Council Meeting (ACC-32) in Jakarta, Indonesia.

Vietnam to help Timor Leste soon become official member of ASEAN: FM

Vietnam will work with other ASEAN member states to discuss, agree on processes, procedures and necessary measures to support Timor Leste to become an official member of the group soon, Foreign Minister Bui Thanh Son said.

Vietnamese circus artists Quoc Co, Quoc Nghiep set new world record

Circus artists Giang Quoc Co and Giang Quoc Nghiep on February 3 (Vietnam time) set a new head-to-head balancing walk plus blindfold record in Milan, Italy.

HCM City faces shortage of teachers at all levels

The Ho Chi Minh City People’s Committee has held a press conference to provide information about socioeconomic issues and epidemic prevention and control in the city.

Female People's Army officer works at EU Training Mission in Africa

Of the seven officers of the Vietnam People’s Army sent by the President to international missions, Lieutenant Colonel Vu Thi Lien is the first officer performing duties at the European Union Training Mission in Central African Republic (EUTM RCA).

VIETNAM NEWS HEADLINES FEBRUARY 4/2023

Minister requests fruitful cooperation in defence industry with other countries

Vietnamese cyber users advised to be cautious about ChatGPT registration

ChatGPT has recently been so popular in various fields. Since there are limits in ChatGPT registration from Vietnam, Internet users here are warned to be careful to proceed with the process to avoid being scammed.

2-3 more submarine fiber cable routes needed for Vietnam

The Vietnam Internet Association’s (VIA) Secretary General Vu The Binh said Vietnam needs at least two or three more submarine fiber cable routes in the next five years to serve mounting demand.

Vietnam still approves use of Covid antibody treatment

Vietnam still approves use of Covid antibody treatment Evusheld as it is still effective against subvariants circulating in the Southeast Asian country.

Former Coast Guard generals accused of embezzling $2.1 million

The crime allegedly started in 2019 when the Vietnam Coast Guard’s Department of Technology was allocated VNĐ150 billion (US$6.3 million) to purchase equipment.

Transport Ministry told to disburse VND94 trillion in 2023

The Government has tasked the Ministry of Transport with disbursing nearly VND94.2 trillion of public investment in 2023, up 1.7-fold against the 2022 figure and 2.2-fold versus 2021.
back_to_top