Vietnam Dong and US Dollar Exchange Rate

The memories of Vietnam war still lingers in the mind of many US Citizens. But since the completion of the Vietnam war in 1975, the United States and Vietnam had gone on very different economic paths.

On one hand, the United States developed economically to be THE most powerful economy in the World, with China and Japan still a distance second. On the other hand, Vietnam had languished within the realms of third world country, with the country still amongst the poorest nation in Asia and within South-East Asia.

As a result, Vietnam is unable to stabilise its own currency and against the US Dollar, the Vietnam Dong had maintained a continuous slide.

Currently, 1 US Dollar trades at 19,607.84 Vietnam Dong, or 1 Vietnam Dong compared against 0.000051 US Dollar. With uncertain political setup as well as slow infrastructure development within Vietnam, we forecast that the exchange rate between the Vietnam Dong and the US Dollar will continue to slide in the medium term, probably crossing the 20k milestone at 1 US Dollar = 20,000 Vietnam Dong in the later part of 2011.

While this might not impact the farmers in Vietnam, inflation is bound to set in for the middle class which imports products from United States or the rest of Asia. Already, Read the rest of this entry »

Japanese Yen warring the Korean Won

Besides being physically close to each other, both Japan and South Korea have many things in common..

Historically, both countries used to be controlled by China. Both share similar literal heritage. Both countries are now respective economic powerhouse in their own right, riding onto the electronics boon during the 1980s to 1990s.

Sharing similar commonalities however, might not be a good thing as we know now. After all, both countries have been at brickheads recently, with Japan accusing Korea of doing a “China” – using monetary and fiscal policies to deflate the value of the Korean Won. Such a move is targeted by Korea to make their products more compelling to foreign importers, howbeit at the expense of other competitors, including Japan.

Currently, 1 Korean Won trades at 0.07338  Japanese Yen (or 1 Japanese Yen = 13.627 Korean Won), a good depreciation of some 2.3% compared to just months before. This means that theoretically, Korean Products are now 2.3% cheaper than Japanese Products and with simply economics, there is no guessing what this would mean to the average consumer when choosing to buy a Korean or Japanese TV Set.

The ironic thing is both Korea and Japan had not hurled such public accusations at China, which had been acknowledged by both big and small nations as manipulating the Chinese Yuan Read the rest of this entry »

2011 – The Year of the US Dollar

2011 could well cut out to be one of the most fruitful year for the greenback.

Since the early 90s to 2010, the Chinese Government had been having a great field trip keeping the Chinese Yuan well below how the market values it, giving an artificial force by using the Chinese Yuan to buy against the US Dollar. This manipulation by the Chinese government forces down the Yuan against major currencies like the US Dollar. While such intervention is well within international laws, the Obama administration must now be considering a tit-for-tat in adopting the reverse method against the Chinese Government.

Of course, this is not a game of currency – it is really about fighting for survival. Whoever gets a lower currency gets a more Read the rest of this entry »

The Raging Currency War

Currency is conveniently used as a tool or a lever by nations when it comes to global competition. The rule of the economics couldn’t get any simpler when it comes to the currency gain. To increase your net exports, you devalue your currency and thus increase the demand for the cheaper products by foreign consumers.

China had been one of the incumbent when it comes to the currency war. The yuan had long be considered undervalued. Currently, the China Yuan trades against the US Dollar at 1 US Dollar = 6.6664 Chinese Yuan (RMB). The Chinese Government had long been imposing strict controls on the Chinese Yuan, preventing and escalating value which could stifle the growth of the Chinese economy. This measure is good for the Chinese market – however, it comes as an expense to global competitors whom face declining sales and pressure to undercut export prices.

To this tune, the US Dollar had been silently depreciating the value of the greenback – since 2006, the US dollar had slided some 15% against the Euro, some 9% against the  Swiss Franc and even some 8% against the Singapore Dollar. The Japanese Yen and Euro however, had appreciated against major currencies. This causes nations in the Eurozone Read the rest of this entry »

Chinese Yuan and the Malaysian Ringgit

On 19th Aug, Chinese Yuan started trading against the Malaysian Ringgit, as declared by China Foreign Exchange Trading Centre (CFETC).

The move groups the Malaysian Ringgit within a privilege few which can trade direct against the Chinese Yuan (RMB), including both the US Dollar and the Euro. Currently, the Malaysian Ringgit trades against the Chinese RMB at 1 MYR = 2.161 Chinese Yuan (RMB). With the latest announcement by CFETC and as a consequence to limit any speculation, the Chinese Government stated that the yuan is now only allowed to trade up to five percent (up or down) against the ringgit from the central parity rate.

As the Yuan is the more dominant currency, the announcement brings more stability towards the Malaysian Ringgit with the soft pegging. The bodes will for the Malaysian Ringgit, exemplified by the fact that the Ringgit rose to a 13 year high against the US Dollar since the announcement by CFETC was made.

Speculators are now pursuing the Singapore Dollar as well Read the rest of this entry »