Vietnam is pursuing the goal of joining the ranks of high-income economies by 2045, while maintaining control over inflation and protecting the purchasing power of the Vietnamese dong. Development experiences from countries such as Japan, South Korea, China, and Singapore show that exchange rates, productivity, and inflation form three tightly linked strategic pillars. Together, they provide a foundation for growth and resilience against macroeconomic shocks. The exchange rate between the Vietnamese dong and the U.S. dollar has hit a record high. While many currencies around the world have appreciated against the weakening U.S. dollar since the beginning of the year, the VND has continued to depreciate against it, resulting in a significant loss of value compared to other global currencies. This partly explains why Vietnam’s stock market has been growing strongly in recent months, yet net selling by foreign investors remains at record levels. For instance, for European investment funds, the depreciation of the VND against the euro since early this year could erase all portfolio growth gains achieved during the same period. The exchange rate is not merely a tool for international transactions but also reflects purchasing power and influences labor productivity when comparing economies. A rapid depreciation can […]