For the first time, the strength of Vietnam dong in relation to commercial partners is launched in Vietnam.
On July 20, 2009, Bien Viet Securities Joint Stock Company launched the VND-Index, the gauge of VND strength. This is a product Bien Viet Securities joined hands with South Korea’s Woori Investment& Securities Ltd to develop.
The VND-Index, or Trade Weighted Vietnamese Dong Index, is the value index of VND relative to major trade partners of Vietnam, helping foreign exchange investors to know the value of VND and its international payment strength. Foreign exchange investors can also use this index to value a foreign currency to Vietnam.
Vietnam’s major trading partners in 2008 included the US, China, Japan, the EU, Taiwan, Singapore and South Korea. Currencies of these seven countries will be added to the basket, based on their individual import-export values with Vietnam.
Total import-export value of Vietnam with these seven territories accounts for more than 70 per cent of its total import-export value. In 2008, Vietnam’s export value was US$62.9 billion, in which these seven territories took up some 66 per cent, while its importing value was US$79.9 billion, in which these areas occupied 74 per cent.
CBV said the number of territories in the basket used to calculate VND-Index will change on annual basis, depending on import-export values with Vietnam.
The index has been designed to include a daily nominal index and a monthly real index adjusted for inflation, each set at a starting point of 100 beginning from January 2009.
According to CBV, the VND-Index is computed as the geometric mean of the bilateral exchange rates of the included currencies. The weight assigned to the value of each currency in the calculation will be based on trade data and will be annually updated.
L.D
Vietnamese
