Historical Sketch

After the Japanese surrender in World War II, France restored the colonial rule over the southern part of Vietnam. After the French defeat of 1954 and the subsequent Geneva peace agreement, the partition between North and South Vietnam was effected. Between the mid-1960s and mid-1975s the Vietnam War opposed the two Vietnamese states, until finally North Vietnam defeated the south state. In 1976, both Vietnamese states merged into the Socialist Republic of Vietnam.

Monetary History Overview

The French defeat in the war of independence resulted in the Vietnamese partition of 1954, and the Republic of Vietnam was established in the South. The 1st South Vietnamese Dong replaced the Indochinese Piastre on par beginning of the following year. The peg to the French Franc was kept unaltered for more than ten years. After the outbreak of the war against North Vietnam, the devastations began to destabilize the currency. In June 1966, the Dong was devalued by 55% and re-pegged to the US Dollar. The official rate became increasingly inoperative and floating effective rates dominated the everyday transactions. In 1972, the official rate was abolished, which translated to a nominal 81% devaluation. The exchange rate continued to depreciate and lost another 44% until the end of the Vietnam War. In April 1975, North Vietnam conquered the South, and mid-1976, the countries merged. The monetary unification was carried out in May 1978. In preparation, a currency reform was done in South Vietnam in September 1975, creating the 2nd South Vietnamese Dong. In September 1976, both Vietnamese currencies re-pegged to the IMF Special Drawing Rights (SDR) and had a fixed ratio of 1 South Vietnamese Dong equals 1.25 North Vietnamese Dong.

South Vietnam joined the International Monetary Fund (IMF) on 21.09.1956. Its membership was taken over by the united Socialist Republic of Vietnam.

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