MINISTRY OF EDUCATION AND TRAINING

~~~~~~*~~~~~~

MACROECONOMICS PROJECT
Group 3
Topic: Vietnam Exchange Rate

Course: Macroeconomics - INE1051

Lecturer: Nghiêm Xuân Hòa

Members:

1. Lê Ngọc Châm – 21070292

2. Phạm Thùy Dương – 20070434

3. Nguyễn Hà Ngân – 20070547

4. Hoàng Dương Hưng – 21070401

5. Lê Đình Hương Giang - 21070185

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CONTENTS

I. Identifying exchange rate .................................................................................. 3

1. What is the foreign exchange market? ........................................................... 3
2. What is the exchange rate? ............................................................................ 3
3. Nominal & real exchange rates ...................................................................... 3
II. The role of exchange rates in an open economy .............................................. 5
III. Factors affecting the exchange rate ................................................................. 5
1. The supply and demand for foreign currency ................................................ 5
2. The domestic currency circulation and inflation situation ............................ 6
3. Interest rate differential between two currencies ........................................... 7
4. Level of political stability and economic efficiency ...................................... 7
5. The actual average export-import rates ......................................................... 7
IV. Exchange rate management policy and exchange rate regimes ...................... 7
1. The exchange rate policy ............................................................................... 7
2. The exchange rate regimes ............................................................................ 9
V. The current situation of the exchange rate in Vietnam .................................. 12
1. Vietnam's exchange rate policy ................................................................... 12
2. Tools to manage the exchange rate policy of the State Bank ...................... 13
3. Exchange rate movements in recent years ................................................... 14
VI. Evaluation of the state bank's exchange rate management policy ................ 16
1. Achievements ............................................................................................... 16
2. Limit ............................................................................................................. 17
3. Reasons ........................................................................................................ 17
4. Recommendations on the management of the exchange rate regime in
Vietnam ............................................................................................................... 18
VII. Conclusion ................................................................................................... 18

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I. IDENTIFYING EXCHANGE RATE:

1. What is the foreign exchange market?

The foreign exchange market is an international money market where transactions in

foreign currencies and means of payment are of value such as foreign currencies. In other
words, the foreign exchange market is the place where transactions of buying, selling and
exchanging foreign currencies and international payment instruments of such value as
foreign currencies take place.

By narrow definition, the foreign exchange market can also be seen as the interbank foreign
currency market, as banks account for about 85% of all foreign exchange transactions.

2. What is the exchange rate?

The exchange rate is also known as the foreign exchange rate or rate. This is the exchange
rate between two currencies of two countries. Simply put, this is the conversion of the price
of one currency into another country's currency. More specifically, the amount of currency
needed to buy 1 unit of another country's currency.

Eg: 1 GBP = 1,2 USD

The Vietnamese exchange rate is the ratio of the value of the Vietnamese dong to the value
of a foreign currency.

Eg: 1 GBP = 28,052 VND

1 USD = 23,410 VND

3. Nominal & real exchange rates:

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Nominal exchange rate Real exchange rate

The nominal exchange rate is the rate

you find at banks and money The real exchange rate shows the ratio
changers, and the rate at which you between the local price level and the
Define can exchange foreign currency for foreign price level.
your local currency or vice versa.
Including the inflation factor.
Excluding the inflation factor.

The real exchange rate shows the

quantity of goods and services
The nominal exchange rate is the
Meaningful purchased in one country that can be
currency conversion rate.
exchanged for goods and services of
another country.

A high nominal exchange rate may The real exchange rate may be more
indicate that the domestic currency useful when assessing the effect of the
can buy more foreign goods and exchange rate on international trade
Role
services. However, this may not be than the nominal exchange rate
the case when the real exchange rate because it shows how many times a
between the two is calculated. good can be purchased abroad.

● Formula:

● Real exchange rate between the United States and other countries:

+ A price index for a U.S. basket (P)

+ A price index for a foreign basket (P*)

+ The nominal exchange rate between the U.S. dollar and foreign currencies (e)

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II. THE ROLE OF EXCHANGE RATES IN AN OPEN ECONOMY:

❖ The significance of comparing currency purchasing power
The exchange rate is a powerful tool for calculating and comparing the value of the
domestic currency versus the value of the foreign currency, the price of domestic goods
versus the price of international goods, and labor productivity. It will then be possible to
calculate the effectiveness of foreign trade transactions, joint venture activities with
foreign countries, foreign loans, and foreign economic policies government's.

❖ The exchange rate affects import and export activities

If the domestic currency depreciates (the exchange rate rises), the price of that country's
exports falls, increasing goods' competitiveness in the international market. The
economy earns a lot of foreign currency when the exchange rate rises, which helps to
improve the trade balance and international payment balance.

❖ The exchange rate influences inflation and economic growth

When the purchasing power of the local currency falls (the exchange rate rises), the
price of imported goods rises, potentially leading to inflation. When the exchange rate
falls (the price of the domestic currency rises), imports from other countries become
less expensive. Inflation has since been reduced, but this has resulted in a narrowing of
production and low growth.

=> It is clear that the exchange rate affects foreign economic relations, the balance of
payments, economic growth, inflation, and unemployment significantly. Coming up with
numerous solutions to stabilize the economy will be made possible by having a
thorough understanding of the workings and the function of the exchange rate.

III. FACTORS AFFECTING THE EXCHANGE RATE:

1. The supply and demand for foreign currency. This is the factor that has the most
direct and powerful influence on the exchange rate's movement.
● If the supply of foreign currency exceeds the demand for foreign currency, the
exchange rate rises.

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Figure 1
● If the demand of foreign currency exceeds the supply for foreign currency, the
exchange rate falls.

Figure 2
● The exchange rate will not change if supply equals demand (if supply and demand
for foreign currency are balanced).

Figure 3

2. The domestic currency circulation and inflation situation:

If domestic currency circulation is stable and well managed, the purchasing power of the
local currency is stable, and inflation is unlikely to break out - this has a positive effect on
the exchange rate (less volatile), but if money circulation is disrupted, inflation rises, and
the purchasing power of domestic currency falls, causing the exchange rate to rise.
As a result, if the inflation rates in the two countries differ, the exchange rate will remain
unchanged

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3. Interest rate differential between two currencies:

When the local currency rises and exceeds the foreign currency, the exchange rate rises.
When the foreign currency rises and exceeds the local currency, the exchange rate tends to
fall.

4. Level of political stability and economic efficiency:

Foreign investors certainly want to invest in politically stable countries with strong
economies. A country with these characteristics will attract more investment than countries
with higher political and economic risks.
For example, political instability can reduce investor confidence in a currency and they will
move capital into the currencies of more stable countries.

5. The actual average export-import rates:

Trade exchange rates are related to the current account and balance of payments. If a
country's export price growth is faster than its import price growth, the rate of trade has
improved positively.
An increased rate of trade indicates that the demand for that country's exports is increasing,
leading to an increase in export revenue, and an increase in demand for the local currency
(and the value of the local currency).
If the growth rate of export prices is slower than that of imports, the value of the local
currency will decrease relative to trading partners.

IV. EXCHANGE RATE MANAGEMENT POLICY AND EXCHANGE RATE

REGIMES:
1. The exchange rate policy:

Exchange rate Policy can be defined as a system of tools used to influence the supply and
demand of foreign currencies in the market, thus allowing the exchange rate to be adjusted
for necessary objectives.

Essentially, the exchange rate policy focuses on two major problems: choosing exchange
rate systems and adjusting the exchange rate.

❖ The objectives of exchange rate management policy:

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In an open economy, the objectives that shape the policy are balanced internally and
externally. Meanwhile, exchange rates are one of the components that can directly
influence the stability, therefore, the process of shaping the exchange rate policy
must directly aim for these objectives: internal and external balance.

These are the two fundamental objectives the exchange rate management policy
must eventually reach. However, in certain stages, the exchange rate policy will
have some specific objectives, for example: Occasionally developing and
maintaining a stable rate; Preserving and protecting the internal currency; Making
full use of the functions of money (including the medium of exchange); Increasing
the external currencies stock,…

● Internal Balancing Objective: It can be described as a state where the resources of

a nation are utilized, this can be achieved at full employment and stable prices.
Unexpected changes in prices can negatively affect trade credits and investments.
The government needs to prevent these sudden rises or drops in aggregate demand
to maintain a stable, expected price. Therefore, the exchange rate is considered an
effective tool for the government in adjusting prices, especially in the international
integration trend, and economy nowadays.
● External Balancing Objective: Unlike the prior objective, the external balancing
objective can’t be easily defined, it mainly consists of the stability in the current
account. As a matter of fact, we are unsure whether the current account should be
balanced, surplus or in shortage, we can only acknowledge that there shouldn’t be a
huge surplus or shortage. Depending on the economic, political, and social condition
of a nation, the government must have a method of adjusting their exchange rate so
that it’s suitable, effective, and particularly influences the import, export actions,
and international investment.

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2. The exchange rate regimes:

BTI The exchange Character Advantage Disadvantage

rate regimes

- The exchange rate is - Speculative

- Balance of payments.
determined based on activity, increased
the supply-demand - Maintain the inflation and
Fully floating
relationship. independence of the foreign debt.
1 exchange rate
monetary policy system.
regime - There is no central - Affecting the
bank or government - The economy is investment
intervention. enhanced with stability. psychology of
customers.

It is the exchange rate

- The role of the Central - Limit the flow of
regime in which the
Managed Bank is enhanced. exchange rates
Central Bank
floating between countries.
2 intervenes to maintain - The exchange rate is
exchange rate
the exchange rate stable at an appropriate - The exchange rate
regime
fluctuations in a level. is adjusted to the
specific region. appropriate level.

- It is the exchange rate - International trade is

regime in which the boosted by growth.
central banks of
countries maintain a - Macroeconomic
- Markets
fixed price. policies of countries are
Fixed exchange experience unfair
3 more disciplined.
rate regime -The exchange rate competition.
differs only to a small - International
- Devaluation of the
extent around the cooperation between
predetermined central countries is
exchange rate. strengthened.

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❖ The optimal management of the exchange rate depends on:

- The economic goals of policymakers
- The source of the shocks to the economy
- The structural characteristics of the economy under consideration

❖ De jure and de facto exchange rate regimes

● De jure:
The de jure exchange rate regimes can be defined as what a country's government ‘claims’
to do and in regard with the bipolar view, supports it and shows that countries are generally
moving towards either corner of the bipolar view of fixed exchange rate or floating exchange
rate. The de jure exchange rate regimes are important as a way of what the central bank
communicates to the public as this is likely to have bearing on the outcome. By having a de
jure fixed exchange rate and a de facto floating exchange rate, the breach of commitment will
likely have negative consequences. On the other hand, having a de jure floating exchangerate
and a de facto fixed exchange rate does not breach its commitments.

● De facto:
The de facto exchange rate regime can be defined as what a country's government actually
does in regard to its exchange rate system despite what it claims. This is usually associated
with a ‘fear of floating’ and is usually seen as intermediate exchange rate regimes. The
bipolar view is not really supported as the country's actual (de facto) exchange rate regime
often differs from its de jure, or officially announced, policy, raising questions about
whether the observed trend away from intermediate regimes is a fallacy. The crux of the
matter can be briefly put: free capital movements can be hugely beneficial if they are well-
behaved but in the real world they can be perverse. There is therefore a case for
government action to counter this perversity. This view does not however support the
bipolar view which claims that the market would find its own way around them.

❖ The basis for choosing the exchange rate regime:

The choice of exchange rate regime revolves around two main issues:
- The relationship between national economies and the global system.
- The degree of flexibility of domestic economic policies.
● Firstly,
Exchange rate regime selection is to choose whether the system is open or closed. Options
for choosing an exchange rate system favor either fixed or floating exchange rates.

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- A country that chooses a fixed exchange rate accepts constraints on national

economic policies. The country's economic policies must be consistent with
maintaining a fixed exchange rate, so domestic policy making becomes exogenous
and subject to exchange rate agreements.
=> From this, it can be seen that this choice is tantamount to imposing international
constraints on national economic policies. More broadly, choosing a fixed exchange rate
regime is equivalent to choosing an open system, in which there is always an interaction
between national factors and the world system.
- In contrast, the flexible exchange rate option, in principle, does not accept any
constraints on domestic economic policies. Whatever the impact of policies,
exchange rate fluctuations will keep them in effect only within the country. And
accordingly, the results of foreign economic policies no matter what, adjusting the
exchange rate will keep them out of the country.
=> In effect, this choice keeps national policy from being internationally bound. Broadly
speaking, choosing a flexible exchange regime separates the national economy from the
international environment.
● Secondly,
We need to pay attention to the flexibility of domestic economic policies. The extent to
which this differs is evident between the choice of either type of exchange rate regime.
Since a fixed exchange rate represents a commitment to impose constraints on national
economic policies, it means that it is not possible to pursue domestic economic policies
independently.
In contrast, a flexible exchange rate is a tool that can be used to keep the economic
activities of the international system from influencing national policies. It is therefore
possible to pursue national policies without regard to the outside world and thus are
characterized by a closed system.

● The exchange rate regime of Vietnam is managed floating exchange rate

regimes.
Before 1999, the Vietnamese government applied a fixed exchange rate regime for
businesses, keeping the VND exchange rate with other currencies at a stable level to
facilitate export activities and limit exchange rate risks. . But in recent years, when the
global economy is growing and the real exchange rate integration is certain to take place.
Therefore, to match the current economy, Vietnam has started to apply the state-owned
bank's exchange rate under a managed floating regime.
Reasons for Vietnam to apply the SBV's exchange rate under the managed floating regime:

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- Operating the exchange rate under a managed floating mechanism will be more
flexible, suitable for the context of international trade and investment, which helps
to move faster after a series of free trade agreements have been signed. signed.
- By managing the exchange rate in a new way, the State Bank will implement
synchronous monetary policy solutions to ensure the goal of stabilizing the foreign
exchange market and stabilizing the macro-economy.
- The flexible exchange rate helps limit the increase in money supply, which causes
inflation in a certain time.
=> Therefore, the application of a more flexible mechanism of the State Bank's exchange
rate management will be suitable to the current economic conditions and avoid the
phenomenon of increasing deposit interest rates in VND, adversely affecting the ability of
the bank to recover businesses in the economy.

V. THE CURRENT SITUATION OF THE EXCHANGE RATE IN

VIETNAM:
1. Vietnam's exchange rate policy:
The year 2000 marked an important turning point for Vietnam's foreign exchange market
when the State Bank of Vietnam completely changed the exchange rate determination
mechanism.
From subjective exchange rate determination according to the will of the State Bank to a
more objective exchange rate determination regime based on market supply and demand - a
managed floating regime.
To adjust the exchange rate, the SBV can adjust supply and demand by buying or selling
foreign currencies on the interbank foreign currency market.
This management mechanism is more flexible, more flexible, and in line with international
practices, contributing to enhanced integration into the world economic community.
By 2014, the State Bank of Vietnam had set an exchange rate target of no more than ±2%.
This is also the year when VND credit increased slowly, accordingly, the State Bank
loosened the foreign currency loans according to the Government's policy, focusing on
priority areas and the ability to balance foreign currency of commercial banks. commercial.
With an interest rate lower than 4-5%/year compared to VND loans, businesses can access
cheap credit.
In Vietnam, the exchange rate depends on external economic conditions, trade balance and
operating policies of the State Bank. The exchange rate management policy of the State
Bank is a flexible central exchange rate mechanism. That is, apply a fixed exchange rate
and adjust it by ±2%.

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2. Tools to manage the exchange rate policy of the State Bank:

❖ VND and USD interest rates
This tool directly affects the strength of the domestic currency against foreign currencies
and indirectly affects the exchange rate. The current popular USD interest rate is 0%/year,
which means that when people deposit USD in banks, they will not earn interest.
To make a profit, people have to convert USD into VND and deposit in VND to enjoy the
current interest rate of 7-8%/year.
The State Bank of Vietnam has taken action to administer and direct credit institutions.
Commercial banks pushed the VND interest rate level in terms to increase around the 4%
mark in order to maintain an attractive level for assets denominated in local currency
compared to assets in foreign currency, thereby reducing the speculative sentiment of
holding assets by foreign currency.
❖ Foreign exchange reserves
With the record high foreign exchange reserves, the SBV has enough tools and resources to
manage the exchange rate in a stable direction, meeting market demand and supply.
The SBV has intervened directly through the sale of foreign currency from foreign
exchange reserves in order to timely balance supply and demand in the foreign exchange
market, thereby reducing pressure on the exchange rate.
❖ Inflation and inflation expectations
Inflation is the devaluation of money over time. This means that if the inflation rate is high,
the exchange rate tends to rise.
Expected inflation: The State Bank continues to send out a message about prudent and
flexible monetary policy management in order to stabilize inflation and the macro-
economy. This measure contributes to increasing public confidence in the SBV's operations
and the value of the local currency, thereby contributing to stabilizing the financial market
in general and the foreign exchange market in particular.
❖ Balance of trade
Increase exports to stabilize the exchange rate.
With the current economic context, the State Bank cannot let the exchange rate float
because it can cause unpredictable harm to the economy.
Vietnam is a country with an open economy, if fully floating, the exchange rate may be
pushed up 5%, even 10%, import and export activities will be in danger.
It can be seen that the SBV's exchange rate management method is quite special compared
to before, that is, the SBV has used market-based tools rather than administratively
imposed tools.

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This shows the determination to pursue a flexible and market-oriented central exchange
rate mechanism of the State Bank of Vietnam. The interest rate tool is taking effect in the
exchange rate management of the State Bank of Vietnam.
The flexible oriented adjustment of the State Bank to the interest rate tool has also
contributed to adjusting the behavior and psychology of market members, thereby
stabilizing the exchange rate and the foreign exchange market.

3. Exchange rate movements in recent years:

In 2021, the central exchange rate of the Vietnamese dong against the US dollar announced
by the SBV increased by 0.1%, while the exchange rate on the interbank market decreased
by about 1.6% compared to the beginning of the year.

Buying price in USD from the beginning of 2020 to December 31, 2021
(vietstock.vn)

On the free market, the exchange rate of the Vietnamese dong against the US dollar
increased by 0.5% due to the widening gap between the domestic and international gold
prices.
The factors that affect the exchange rate this year mainly come from the international
market, in which the two main factors are the US economic growth slowing down due to
the impact of the Covid-19 pandemic and the Federal Reserve. The US (Fed) still kept the
loose monetary policy to stimulate the economy affected by the pandemic, causing the
dollar to increase only slightly by 0.1% compared to the beginning of the year.

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The central exchange rate from the beginning of 2020 to December 31, 2021
(vietstock.vn)

The central exchange rate movement in 2021 fluctuated quite strongly (created 4 big
waves) compared to 2020.
Each wave crest corresponds to the event that the USD price in the world market increased
sharply as the Covid-19 vaccination work and the huge economic stimulus package of the
US supported the expectation of a strong recovery of the US dollar. country after the
pandemic. However, with the maintenance of low interest rates to stimulate the US
economy still facing many difficulties due to the pandemic, the USD price in the world
market quickly weakened after each peak.
❖ The year 2022
Analysts at Shinhan Bank forecast the USD/VND exchange rate will increase and then
stabilize at the end of the year due to concerns about inflation and tightening policies.
According to experts, the increased volatility of financial markets due to the US Federal
Reserve's (Fed) tightening of monetary policy earlier than expected and concerns about
inflation due to the Ukraine war, led to the adjustment of the monetary policy, stock market
and exchange rate appreciation.
Thereby, the USD/VND exchange rate increased to more than 23,000 VND/USD due to the
strong US dollar and weak yuan amid concerns about the global economic recession.
Analysts at Shinhan Bank forecast the USD/VND exchange rate will increase in 2022, due
to inflation concerns caused by the Fed's earlier-than-expected monetary tightening policies
and rising raw material prices. However, it will gradually decrease at the end of the year
and maintain around VND 23,000/USD thanks to economic stimulus policies, domestic
demand, the recovery of the tourism industry and foreign investment inflows.

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USD/VND exchange rate forecast in 2022

(vietstock.vn)

Besides, experts also estimate that when Vietnam's inflation approaches 3% due to the
continued increase in global raw material prices, the SBV needs to raise interest rates. The
policy stance of raising interest rates is moderate compared to major countries, the
operating interest rate is expected to be raised to about 4.5% in the second half of the year.

VI. EVALUATION OF THE STATE BANK’S EXCHANGE RATE

MANAGEMENT POLICY:
1. Achievements:
In 2018, the central exchange rate announced by the State Bank increased by about 1.6%,
the transaction rate on the interbank market increased by about 2.7% compared to the
beginning of the year. In the past 7 years, only 2015 saw the exchange rate fluctuate more
strongly with an increase of 5.1%.
The trade balance in 2018 recorded a record surplus (about 7 billion USD).
The supply of foreign currency has increased sharply in the past few years, not only due to
trade surplus, but also the combined result of other reasons, including: the inflow of foreign
direct investment (FDI) into Vietnam remained at a high level despite fluctuations in the
world market. According to the Ministry of Planning and Investment, registered and
additional FDI capital for the whole year of 2018 was estimated at 35.5 billion USD
(equivalent to 2017 level), FDI disbursement reached over 19 billion USD, up 9% over the
same period last year.
With the sharp increase in foreign currency supply, the State Bank, through its activities of
buying foreign currency, currently holds a record high amount of foreign exchange
reserves, as of the first quarter of 2019 foreign reserves. Exchange rate exceeded 65 billion
USD. The high amount of foreign exchange reserves allows the State Bank to intervene to
stabilize the exchange rate whenever there is a big fluctuation in the market, by selling
foreign currency when the price rises to keep the exchange rate from fluctuate too much.

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The dollarization (USD) status of the economy has declined sharply in recent years, while
confidence in the local currency has increased. At the same time, the savings interest rate
deposited in VND is much higher than that of deposits in USD. These factors cause the
demand to hold USD in the population and the USD speculation in the market sharply
decrease, thus reducing the pressure on foreign currency demand.

2. Limit:
Besides the remarkable successes mentioned above, the implementation of the exchange
rate regime of the State Bank in recent years still has some limitations such as:
First, the management of the exchange rate policy of the State Bank sometimes has not
kept up with the fluctuations of the market and has a certain lag. Although the current
exchange rate management mechanism has made positive changes, it is still slow compared
to the fluctuations of the domestic and international environment.
Second, the policy of "two exchange rates" causes many inadequacies. In Vietnam, parallel
to the official foreign exchange market is the existence of a black market. Transactions on
the black market are still active and more liquid than the official market. The exchange rate
on these two markets always has a significant difference. This difference is the cause of
difficulties in the competition in purchasing foreign currency of commercial banks and the
black market.
Third, Vietnam's exchange rate policy still overestimates the real value of VND against
USD and other currencies. In recent years, the SBV has repeatedly adjusted the official
USD/VND exchange rate in an upward direction and widened the trading band in order to
adjust the nominal exchange rate closer to the free market rate. However, in the context of
the economy still has many uncertainties, because the inflation factor in Vietnam is much
higher than that of its main trading partners and the adjustment of the exchange rate by the
State Bank is often slower than the change of the domestic market. Because of inflation,
VND is often overvalued compared to its real value.

3. Reason:
First, Vietnam's foreign currency market in general and the interbank foreign currency
market are still at a low level, which has limited the management of exchange rate policy
by the State Bank.
Second, the lack of currency brokers. Although the State Bank of Vietnam has issued
Decision No. 351/2004/QD-NHNN on currency brokerage, there is still a lack of
professional currency brokerage companies in Vietnam's currency market, thus limiting the
liquidity of money brokers.

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Third, the coordination between exchange rate policy and other macro policies has not been
really synchronized and effective, has not created a positive impact and supports each
other.
Fourth, the legal environment is incomplete and synchronous.

4. Recommendations on the management of the exchange rate regime in Vietnam:

The SBV needs to implement a number of policies to regulate the exchange rate regime,
contributing to stabilizing the exchange rate and foreign exchange market. Specifically:
First, the State Bank continued to insist on stabilizing the macro-economy, promoting
production and restructuring the economy, with emphasis on controlling inflation. The
State Bank also needs to conduct monetary policy in the direction of cautious easing.
Second, studying the implementation of exchange rate reform, switching to a managed
floating exchange rate regime, first of all, Vietnam needs to learn from China's example to
ensure that the system of state-owned enterprises has qualitatively reformed and ready to
meet the requirements for a further reform of the exchange rate.
Third, Capital account liberalization needs to be implemented after the country officially
transitions to a managed floating exchange rate regime. Because, if the capital account is
opened first and the exchange rate regime remains anchored to a currency, capital inflows
increase, there is a risk of causing a credit bubble. Conversely, when capital is withdrawn
massively, reserves will be exhausted if the central bank does not devalue.
Fourth, continue to be consistent with measures to limit dollarization and goldization of the
economy. At the same time, special attention should be paid to the dollarization of cash in
the economy, as this can reduce the size of the statistical error item in the international
balance of payments.
Fifth, thoroughly implement the policy of completely shifting from the foreign currency
borrowing relationship to the foreign currency trading relationship.

VII. CONCLUSION:
The SBV's exchange rate management policy in recent years has achieved encouraging
initial successes, making an important contribution to the stability of the macroeconomy
and promoting economic growth. However, along with the trend that Vietnam is
increasingly integrating deeply into the world economy, the management of the SBV's
exchange rate policy still has certain limitations, it is necessary to continue to improve and
thereby enhancing the role of the State Bank in stabilizing the foreign exchange market,
enhancing the position of the local currency, and making an important contribution to
stabilizing the macro-economy of Vietnam.

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References:
1. https://vietstock.vn/2022/07/ty-gia-usdvnd-se-tang-roi-on-dinh-vao-cuoi-nam-757-
984080.htm
2. https://vietstock.vn/2020/12/ty-gia-mot-nam-nhin-lai-757-815658.htm
3. What Is an Exchange Rate? (thebalance.com)
4. https://chotsale.com.vn/vai-tro-cua-ty-gia-hoi-doai/
5. https://tradequangngai.com.vn/thuc-trang-ty-gia-hoi-doai-o-viet-nam/
6. Various types of Exchange Rate Regimes (theintactone.com)
7. https://tapchinganhang.gov.vn/hoat-dong-cua-ngan-hang-nha-nuoc-viet-nam-tren-thi-
truong-ngoai-te-va-mot-so-ham-y-chinh-sach.htm
8. https://kinhtedothi.vn/on-dinh-ty-gia-hoi-doai.html
9. Exchange-Rate Policies | Macroeconomics (lumenlearning.com)
10. 7 factors that influence exchange rates (alpari.com)

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