VIETNAMESE DONG: Scam or Investment? скачать в хорошем качестве

VIETNAMESE DONG: Scam or Investment?

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. Unlike Iraq, Vietnam actually has more than one real sector in its economy and has legitimate growth potential. It’s a key beneficiary of the “China + 1” movement where multinational companies are diversifying their supply chains away from China. Even many CHINESE companies are moving some production there, since most Vietnamese college graduates speak fluent Mandarin and they see the lack of a dominant religion in Vietnam as a positive. Cheaper labor and land don’t lead to as many cost savings as you’d think since they’re counteracted by higher import and other costs, but lots of companies are still moving production there and that’s likely to continue. Ultimately, that should be a positive tailwind for the Vietnamese economy and currency, but does that mean the dong is a good investment? Not necessarily. Like I’ve explained before, buying a currency is NOT like buying the stock of a country. Vietnam’s economy has had pretty consistently strong growth for the last 30 years, but their currency has weakened the whole time. If I were to be interested in investing in Vietnam, a better way might be through a Vietnam stock market ETF like VNM. Unlike Iraq, Vietnam ACTUALLY has a legitimate stock market you can invest in. To me, that would pretty much ALWAYS be preferable to investing in a currency because currencies don’t pay any interest or generate any profits. Companies can. What a lot of people don’t realize is that when you invest in the stock of a foreign country, you are ALSO investing in the currency. For example, let’s say you buy $100 worth of stock in a fictional Vietnamese company… we’ll call it Vietnam, Inc. Well, that stock isn’t really priced in dollars, it’s priced in dong. So, technically you are converting your dollars into dong when you buy it. If the stock price doesn’t change, but the dong appreciates by 10% against the dollar, your investment would then be worth $110. You would have made 10% in dollar terms because of the currency appreciation, even though the stock price didn’t change. Of course, it also works the other way, but if you’re positive on Vietnam and you REALLY want to invest in the dong, the stock market offers you potential to MORE DIRECTLY benefit from the country’s economic growth and gives you a BETTER chance at positive long-term returns. You get the SAME currency exposure as if you just invested in the dong, but you ALSO get the potential to benefit from growing profits of the companies. Personally, I have NO interest in investing in Vietnam through the stock market, the currency, or any other way. It’s a largely planned economy run by an opaque communist regime that has a (out of room) #vietnamesedong #fundamentalsoffinance