Etymology
The word ''đồng'' is the Sino-Vietnamese word forHistory
French Indochina
The piastre (known in Vietnam as "silver"), was the currency of French Indochina between 1885 and 1952.North Vietnam
In 1946, the Viet Minh government (later to become the government of North Vietnam) introduced its own currency, the dong, to replace the French Indochinese piastre at par. Two revaluations followed, in 1951 and 1959; the first was at a rate of 100:1, the second at a rate of 1,000:1.South Vietnam
United Vietnam and inflation
After Vietnam was reunified, the dong was also unified on 3 May 1978. One new dong equalled one Northern dong or 0.8 Southern "liberation" dong. On 14 September 1985, the dong was revalued again, with one new dong worth 10 old dong. At that time, Vietnamese economists believed that revaluing the currency would increase its value, but it turned out to have the opposite effect: savings of many people were wiped out, the currency experienced unprecedentedly heavy inflation that peaked at 700% in September 1986 and prices skyrocketed. For example, in 1986, the price of agricultural products increased by 2000% compared to ten years before. Aiming to solve this problem, the government banned all forms of non-state-owned internal trade, which they believed to be capitalistic, resulting in an economic crisis so severe that Tố Hữu referred to it as a "vertical downturn". Despite the inflation rates having stabilized as part of the Đổi Mới reforms, especially during the 1990s and early 2000s, the effects of the crisis still last in the value of the dong, one of the lowest in the world today.Coins
First dong
In 1978, aluminum coins dated 1976 were introduced in denominations of 1, 2 and 5 hao, as well as 1 dong. The coins were minted by the Berlin Mint in theSecond dong
Commemorative issues
Commemorative coins in copper, brass, copper-nickel, silver, and gold have been issued since 1986, but none of these have ever been used in circulation.2003 issue
The State Bank of Vietnam resumed issuing coins on 17 December 2003. The new coins, minted by the Mint of Finland, were in denominations of 200, 500, 1,000, 2,000, and 5,000 dong in either nickel-clad steel or brass-clad steel. Prior to its reintroduction, Vietnamese consumers had to exchange banknotes for tokens with a clerk before purchasing goods from vending machines. This was also to help the state ease the cost of producing large quantities of small denomination banknotes, which tended to wear easily. Many residents expressed excitement at seeing coins reappear after many years, as well as concern for the limited usefulness of the 200 dong coins due to ongoing inflationary pressures. Since the launch of the 2003 coin series, the State Bank has had some difficulties with making the acceptance of coins universal despite the partial discontinuation of smaller notes, to the point of some banks refusing coin cash deposits or the cashing in of large numbers of coins. This has prompted laws requiring private and municipal banks to transact and offer services for coins and the full discontinuation of small denomination and cotton-based notes. Also, the coins did not gain popularity from the Vietnamese people. Eventually, State Bank of Vietnam withdrew its distribution in April 2011.Banknotes
First dong
In 1978, the State Bank of Vietnam (''Ngân hàng Nhà nước Việt Nam'') introduced notes in denominations of 5 hao, 1, 5, 10, 20, and 50 dong dated 1976. In 1980, 2 and 10 dong notes were added, followed by 30 and 100 dong notes in 1981. These notes were discontinued in 1985 as they gradually lost value due to inflation and economic instability.Second dong
In 1985, notes were introduced in denominations of 5 hao, 1, 2, 5, 10, 20, 30, 50, 100, and 500 dong. As inflation became endemic, these first banknotes were followed by 200, 1,000, 2,000, and 5,000 dong notes in 1987, by 10,000 and 50,000 dong notes in 1990, by a 20,000 dong note in 1991, a 100,000 dong note in 1994, a 500,000 dong note in 2003, and a 200,000 dong note in 2006. Banknotes with denominations of 5,000 dong and under have been discontinued from production, but as of 2015 are still in wide circulation. Five banknote series have appeared. Except for the current series, dated 2003, all were confusing to the user, lacking unified themes and coordination in their designs. The first table below shows the latest banknotes, of 100 dong or higher, prior to the current series. On 7 June 2007, the government ordered cessation of the issuance of the cotton 50,000 and 100,000 dong notes. They were taken out of circulation by 1 September 2007. State Bank of Vietnam 10,000 and 20,000 dong cotton notes are no longer in circulation as of 1 January 2013.Third dong
The one-hundred-dong bill technically remains in circulation, however due to its low value (roughly $0.004 USD) it is rarely ever used for transactions. The bill is largely seen as a collectible or an oddity, with it often selling for many times its original face value. In 2003 Vietnam began replacing its cotton banknotes with plastic polymer banknotes, claiming that this would reduce the cost of printing. Many newspapers in the country criticized these changes, citing mistakes in printing and alleging that the son of the governor of the State Bank of the Vietnam benefited from printing contracts. The government clamped down on these criticisms by banning two newspapers from publishing for a month and considering other sanctions against other newspapers. Even though the 2003 series banknotes listed in the table below have now completely replaced the old notes of the same denominations, as of 2019 the cotton fibre banknotes of 200, 500, 1,000, 2,000, and 5,000 dong still remain in wide circulation and are universally accepted. A commemorative polymer 50 dong banknote dedicated to the fiftieth anniversary of the State Bank of Vietnam was issued in 2001, but its face value is so tiny that it clearly was meant only for collectors. The note is available in three forms, by itself, in a presentation folder or in a presentation folder in an envelope. In 2016, a 100 dong banknote was issued on cotton-based paper to commemorate the 65th anniversary of central banking.Bearer's checks 1992–2002
To support the growing industrial need for large money transactions, the State Bank issued "Bearer's Checks" or "State Bank Settlement Checks" (''Ngân Phiếu Thanh Toán'') in denominations from 100,000 to 5,000,000 dong. To prevent counterfeiting, these notes had many degrees of protection, their designs were changed every five to six months, and they had expiration dates five or six months after the date of issue. The checks worked until the banking system was upgraded to handle electronic transfers of large amounts of ''đồng'', making most large cash transactions unnecessary.Currency devaluation
In November 2009, the Vietnamese government decided to devalue the Vietnamese dong by 5% and at the same time raise interest rates to 8%. This was seen as a move that could destabilize the financial markets in2022 to 2024
In response to increasing pressure on the Vietnamese dong as a result of high inflation in the US, on 17 October 2022, the decision was made to increase the dong's trading band from 3 to 5 percent. As a result, from 16 October to 24 October the currency lost 2.98 percent of its value falling from 24,135 to 24,845 Vietnamese dong to the dollar. This decline has continued into 2024 with the dong losing about 4.5 percent of its value between 1 January 2024, and the end of July.Exchange rate
After the revaluation of the Zimbabwean dollar on 1 August 2006, the dong became the least valued currency unit for months. Around 21 March 2007, the revalued Zimbabwean dollar regained least valued currency status (in terms ofSee also
* Economy of Vietnam * Vietnamese cash * VND IndexReferences
* *External links