@fundamentals_of_finance: Is the Vietnamese Dong a Scam or a Legitimate Investment? People have been asking me to weigh in ever since I debunked the Iraqi Dinar scam, so here we go. The short answer is: It’s SOMETIMES a scam but it IS more legitimate than the dinar, although I think there’s a better alternative. Let me explain. Historically, the Vietnamese Dong, just like the Iraqi Dinar, has been hyped up based on false information by currency dealers looking to sell you hard currency at a huge mark-up. That’s a scam. If you’ve been convinced there’s going to be a magical revaluation to a much higher level, you’ve been lied to. That is IMPOSSIBLE. It’s not how currencies work and it’s the OPPOSITE of what Vietnam wants to do. They actually have a long history of artificially DEVALUING their currency to make their exports more competitive, so the idea that they’d try to INCREASE the value a lot overnight is honestly just ridiculous. Look at this chart. The Dong as pretty steadily DECREASED in value vs. the dollar over the last 35 years. Even if you start AFTER they got their hyperinflation under control in the mid-90s, it’s STILL lost over 50% of its value since then. Do you REALLY want to bet on that reversing? Personally, I wouldn’t, but there IS a more legitimate case for optimism in Vietnam than Iraq. The MAIN reason the Vietnamese dong has consistently weakened against the dollar is because their central bank, the State Bank of Vietnam, WANTED it to. The dong is on what’s called a “managed float” against the dollar. Each day, the SBV sets the exchange rate and then uses their reserves to keep it within a certain band from that level. They intentionally devalued it so many times that Trump labeled them a “currency manipulator” and threatened to put tariffs on their imports shortly before he left office. Then, in 2021, they put out a joint statement with the U.S. Treasury agreeing to stop intentionally devaluing their currency. Will they ACTUALLY stop? And if so, does that mean it will go up? Not necessarily, and it’s weakened more since then, but if they did, there would be some further reasons for medium-to-long-term optimism. #vietnamesedong #dong #fx #fundamentalsoffinance

Fundamentals of Finance

Region: BR

Tuesday 18 July 2023 14:00:00 GMT