The Vietnamese dong – one of the world’s highest denominated currencies

The dong (…) is the currency of Vietnam, and at the time of this post 1 US dollar was equal to 22701.48 Vietnamese dong (VND). The dong has the distinction of being one of the world’s highest denominated currency.

The world’s highest denominated banknote (as opposed to the world’s highest-value notes) is the 500,000 dong note. With just two of these you are a dong millionaire.

Every month I have a fistful of dong as I go to pay the rent in cash. Many Vietnamese banks only allow 2 million dong withdrawals, though if you find a Citibank you can withdraw 8 million in one transaction. My first month I spent about 16 million dong.

Etymology

The word đồng derives from the Chinese tóng qián, which refers to Chinese bronze coins from the dynastic periods of China and Vietnam.

In Vietnamese a “d” with a strike through it (đ) is a hard d, while a regular d is soft, sounding like y or z, depending on which pronunciation of Vietnamese you use. For the purpose of this article đồng has been anglicized to dong.

The currency symbol is ₫.

Other highly denominated currencies

The previous highest denomination record-holder was the Zimbabwean dollar (ZWL), which reached $10(14) (somewhere in the trillions) before the currency was disbanded in 2009. Zimbabwe now uses other currencies, including the United States dollar, South African rand, Botswana pula, Pound sterling, Indian rupee, Euro, Japanese yen, and Chinese yuan.

The highest denominated currency is the Iranian Rial, which was trading at 35240.00 for 1 USD at the time of this post.

Currently the unofficial rate of the Venezuelan bolívar (VEF) is running at 4300 per dollar and rising fast, so maybe it will take the crown soon unless it is disbanded.

Note that the Vietnamese dong is relatively stable (or at least rising in line with other currencies of Southeast Asia), so the comparison of numerical denomination with Zimbabwe and Venezuela is not a comparison of economies (more on that below).

A better comparison would be with Indonesia, which is also a rapidly developing nation on a similar trajectory to Vietnam. The Indonesian rupiah (IDR) is the world’s second highest denominated currency. The rupiah is just over 13,000 to 1 USD, and to be a rupiah millionaire you need $75 USD.

The 1 dong note that got me thinking about the dong

I was in Saigon having coffee with a friend and his wife, and she produced a single dong note from her purse. My eyes lit up with curiosity when I saw it. I doubt she has ever seen a man so excited to see a dong, so she said I could have it. I don’t know if it’s a cultural faux pas to accept a dong from a friends wife, but I’ll take it.

In 2017 money a single dong is worth 0.000044 USD. Or to put it another way, you would need 22701 of these to make 1 US dollar. Needless to say, you never see a 1 dong note in circulation.

The smallest note I have seen in circulation is the 200 dong note. I occasionally get 500 dong notes from the supermarket, but the most common small note is 1000, which is .044 cents (it’s the nickel of Vietnamese currency, but in note form).

Puzzled over when a solitary dong would have been worth something, I looked it up and found that the Viet Nam 1 Dong is from 1985 from the second dong series.

A brief history of the dong

After WWII, North and South Vietnam replaced the French Indochinese piastre with the North Vietnamese dong and the South Vietnamese dong. At the end of the war in 1975, the South Vietnamese dong was replaced by the liberation dong (which gets my vote as the best name for a currency ever). The two dongs were unified in 1978, becoming the first dong. In 1985 the dong was revaluated (second dong) with 1 new dong equal to 10 old dong.

The 1 dong note I have is from this era, with 500 dong being the largest note printed at the time. The new dong also marks the beginning of rampant inflation, which can be seen from this historical graph by fxtop.com.

In 1986 the rate was 1USD/23VND, then by 1987 it was 78VND, 630VND in 1988, and 4500VND in 1989.

In 2003 Vietnam introduced plastic polymer banknotes (which was first used by the Reserve Bank of Australia), which is now used for notes from 10,000 and above.

My first visit to Vietnam was in 2005, when the dong was worth 15,000. At that point US dollars were still circulating as an alternative currency. I had arrived from Cambodia where the US dollar was (and still is) the defacto currency, so I was using USD for much of that first trip.

Today, shops are no longer allowed to advertise in USD or accept USD as payment. If you ask nicely I’m sure shops will any form of currency, but officially its illegal.

Future redenomination of the Dong

Despite having more zero’s than any other currency, there has been no mention of the currency being redenominated (rededonginated?)

In my search for news articles relating to a future redenomination, the only articles I found were related to dodgy websites that were promoting the Iraqi Dinar revaluation scam.

Indonesia have been talking about redenomination for years, but knowing Indonesia they will still be talking about it for years to come. The plan there is to remove three zeroes from the currency, so the current Rp 1,000 note (about .75 cents USD) would be Rp1.

With Vietnam being proclaimed as ASEAN’s ‘Silicon Valley’, and being on track to becoming the 20th biggest economy in 2050, redenomination would make sense.

knocking off four zeros would turn a 20,000 dong note into a 2 dong note, so 1 USD would equal about 2 VND. The current notes would then convert as follows:

500 = 0.05
1,000 = 0.10
2,000 = 0.20
5,000 = 0.50
10,000 = 1
20,000 = 2
50,000 = 5
100,000 = 10
200,000 = 20
500,000 = 50

With a redenomination you could then reintroduce coins (there are some rarely-seen coins in circulation), though if Vietnam plan to go cashless by 2020 then maybe coins will be redundant.

Vietnamese Dong – News and further reading

What the Big Mac index says about the dollar and the dong – [23/07/21]