There’s a lot of confusion for investors, importers, and even travelers about who really controls the USD/VND exchange rate—and more importantly, how. If you’re running a business that pays suppliers in Vietnam, or you’re an expat paid in dollars, knowing the mechanics behind the State Bank of Vietnam’s (SBV) policies is essential. This article dives into the nuts and bolts of the process, shares my own firsthand experience dealing with Vietnamese banks, and compares how Vietnam’s approach to “verified trade” in currency markets stacks up against international norms. Plus, I’ll share a real-world case of how a sudden policy shift can throw your cash management off balance.
Let’s say you’re a small electronics importer in Ho Chi Minh City. Every month, you need to buy $50,000 worth of components from the US, pay your staff in dong, and keep profits stable. If the dong suddenly weakens, your costs spike. If it strengthens, your Vietnamese customers might complain about higher prices. This constant dance makes understanding SBV’s role more than just trivia—it’s central to your business survival.
Unlike the US Federal Reserve, which floats the dollar, Vietnam’s SBV manages a “crawling peg” system. In plain English, this means the dong doesn’t float freely but isn’t fixed either. The SBV announces a daily reference rate (tỷ giá trung tâm) and allows the dong to move within a band, currently +/-5% around this center rate.
Every morning, the SBV publishes its official rate. I still remember the first time I had to wire dollars to my Vietnamese supplier. I checked three different Vietnamese banks—Techcombank, Vietcombank, and BIDV. None of them matched the SBV’s official rate exactly. Instead, they quoted rates that hovered within a small margin, reflecting their own supply/demand and risk calculations.
The SBV calculates this reference rate based on several inputs:
You can see the daily rate and band on the SBV’s official site: SBV Official Exchange Rate
If the dong gets too strong or weak—maybe because of a trade shock, or a flood of foreign investment—the SBV steps in. They’ll use Vietnam’s foreign currency reserves (which, as of late 2023, are around $90 billion according to IMF data: IMF Reserves Data) to buy or sell USD.
Here’s what happened during COVID-19: the SBV sold USD to stabilize the dong when exporters were panicking, and then, as remittances and FDI bounced back, they bought up USD to rebuild reserves and prevent the dong from appreciating too quickly. I got caught once when trying to lock in a rate for a large transfer—by the time my bank processed the request, the SBV had tweaked the band and my cost went up by 1.5%. As a small business, I felt that pain directly.
Unlike in the US or EU, you can’t just walk into any Vietnamese bank and buy unlimited USD. The SBV enforces strict rules: you must show legitimate “verified trade” documents—import invoices, contracts, or proof of tuition payments abroad. Your bank will scrutinize these, and if something looks off, they’ll refuse the transaction. I remember a friend trying to buy USD for a property purchase abroad; his bank demanded all sorts of notarized paperwork, and still refused, citing SBV’s regulations.
These controls are codified in several regulations, for example:
Let’s take a quick detour and look at how “verified trade” is handled in different countries. Here’s a table summarizing the differences:
| Country | Standard | Legal Basis | Enforcement Agency |
|---|---|---|---|
| Vietnam | Verified trade documents required for all major FX transactions | Circular 20/2011, Decree 70/2014 | State Bank of Vietnam |
| United States | No documentation needed for most FX; anti-money laundering rules apply | Bank Secrecy Act, OFAC | Federal Reserve, Treasury |
| China | Similar to Vietnam; documentation required for large/overseas transfers | SAFE Regulations | State Administration of Foreign Exchange |
| EU | Open market, minimal controls; AML and KYC apply | MiFID II, AMLD5 | ECB, National Central Banks |
As you can see, Vietnam’s system is much closer to China’s—lots of paperwork, lots of oversight, and a focus on keeping currency stable by tracking every dollar that comes in or out. This is in stark contrast to the US or EU, where you can buy large sums of foreign currency with little more than an ID check.
In October 2022, the SBV suddenly widened the dong’s trading band from +/-3% to +/-5%, reacting to global dollar strength. For companies with USD invoices due in November, this was a shock. One logistics manager shared on a Vietnamese business forum (you can find discussions like this on Webtretho) how he scrambled to hedge currency risk, only to find banks refusing to sell him additional USD because he lacked proper “verified trade” paperwork for the full amount. His workaround? Splitting invoices and getting suppliers to issue smaller, multiple contracts—something that’s common on the ground, but technically risky.
I asked a finance professor at the National Economics University in Hanoi (paraphrased from a 2023 interview in Vietnambiz):
“SBV’s approach is about stability. If they let the dong float freely, Vietnam would risk capital flight or sudden inflation. Verified trade isn’t just bureaucracy—it’s a way to keep speculation and hot money out, and to support manufacturing exporters, who need predictability in the FX market.”
To wrap up: the SBV manages the USD/VND rate through a mix of daily reference rates, direct market intervention, and strict documentation requirements for foreign currency transactions. This system has helped Vietnam avoid the wild swings seen in some emerging markets—but it comes at the cost of flexibility and sometimes creates headaches for people and businesses needing USD.
If you’re planning large FX transactions in Vietnam:
If you want to explore further, the IMF’s 2023 Article IV Report on Vietnam gives a deep dive into the pros and cons of the current FX regime.
Honestly, I used to think all central banks did things the same way. Vietnam’s careful, hands-on approach has made me rethink how important local context is for FX policy—and how easy it is to get tripped up if you treat the dong like any other currency.