WHAT IS Vietnamese Dong
The Vietnamese dong (VND) is the current currency of Vietnam and replaced the use of the hao in 1978. Each hao, or hào, equaled one-tenth of a Vietnamese dông and was further divided into ten xus. Neither of which are in use in Vietnam.
The Vietnam National Bank issued and circulated the hao and the xu. Central bank responsibilities now fall under the supervision of the State Bank of Vietnam. They are often used in Vietnamese ETFs.
BREAKING DOWN Vietnamese Dong
Currently, Vietnam uses the Vietnamese dông (VND). At one time, the dông subdivided into hao, but since they are no longer legal tender, the dông no longer divides into smaller units of money. With the constant increasing of inflation, the denominations for the dông grew as well. Finally, the values became so large, that the hao was no longer necessary to subdivide the dông.
The Vietnam National Bank, which became the State Bank of Vietnam in 1960, issued the hao. The hao appeared first as banknotes then as aluminum coins. The Vietnamese hao is no longer an official currency. The word hao has similar linguistic origins as the Chinese hào, which means one-tenth of a currency unit. An individual may still use the word “hao” to refer to one-tenth of a Vietnamese dong, but it is no longer a circulated currency.
Dông is the New Hao
In the Vietnamese language, the word dông originates from the term for money. Therefore, the word can refer to any currency by merely adding a country's name before it. For example, one may apply to the U.S. dollar (USD) as the U.S. dông and even could extend that to refer to the U.S. dime and cent. Because of this, the currency appears as dông Vietnam or the Vietnamese dông.
The State Bank of Vietnam issues the Vietnamese dông, which suffers from chronic inflation. Today, the global currency market considers it one of the poorest currencies worldwide. As an example, in 2018, one U.S. dollar equaled 22,770 Vietnamese dôngs. Along with issuing bank notes, the State Bank of Vietnam promotes monetary stability and formulates fiscal policies and supervises all commercial banks’ activities in Vietnam. The State Bank of Vietnam also issues government bonds and manage the country’s international reserves.
Dông coinage is no longer minted or accepted in everyday commerce, but the dông coins remain legal tender and banks will accept them for deposits. Dông banknotes come in denominations of 1,000, 2,000, 5,000, 10,000, 20,000, 50,000, 100,000, 200,000, 500,000.
The Vietnamese dông traces its origins to 1946 when the Viet Minh government, later to become the government of North Vietnam, introduced the currency to replace the French Indochinese piastre at par. In 1953, the State of Vietnam, which was later to become South Vietnam, issued their dông, with banknotes listing the price in both dông and piastres. In 1978, Vietnam reunified the dông.