Effectiveness of Vietnam exchange rate policy and forthcoming issues

Abstract

In an open economy, exchange rate policy plays a crucial role, being seen as a "valve" to regulate domestic economic activities in association with external parties. According to the conventional theory, exchange rate policy is usually different among different countries at specific periods, based on specific socio-economic conditions in the country and in the world. Therefore, choice of optimal exchange rate policies becomes guidlines to lead the market in the right direction, and enhance effectiveness of the country’s monetary policy. The paper will focus on the theoretical models of identifying optimal exchange rate regime. In addition, based on overview of Vietnam's exchange rate policy in the past years, the author analyses some forthcoming issues related to Vietnam exchange rate policy.