The determinants of Vietnam black market exchange rate

Abstract

The situation of two systems of exchange rate in Vietnam is controversial. The black market exchange rate matter needs to be concerned by governmental agency because it free trade restricts the effectiveness of foreign exchange management. The research about the determinants of Vietnam black market exchange rate then is carried out in order to recommend some solutions for this market exchange rate management. Therefore, my research is useful for government, business and the citizens.

The empirical approach would be used in this study. This method provides the proof of the gap between the theory and empirical data in Vietnam. Econometric regression model is the tool for examining the relationship between black market exchange rate and four variables: trade balance, inflation, interest rate and official exchange rate. The main findings and some recommendations are then based on above results.