Balance of international payments of a number of developing countries and Vietnam

1. A common characteristic of the developing countries

 Definition:

The term “ developing countries ” refers to the economic development of a country, although it can affect all
aspects of it (political, social, etc
The economy of these countries is in a state of transition, between underdevelopment and fully developed
economies. The criteria used to determine that a country is developing
1. Characteristics:
 Infrastructure:
For development to be possible and for a country to be distinguished from an underdeveloped country, it is
necessary that there is a certain infrastructure. This infrastructure must be physical (means of transport and
communication, available technology) and institutional (legislative framework). However, technological
development may depend on other countries

 Internal economy:
One of the requirements for a country to enter developing is that there be significant savings and investment .
However, this feature is not enough.
High unemployment rates are often found in these countries . In countries that achieve high levels of per capita
income, low employment or precarious employment of a sector of the population results in large differences in
the quality of life among the inhabitants. That allows labor to be very cheap.

 External economy
Developing countries are often in a situation of dependency within the international division of labor
panorama . The consequence is that commercial exchanges are subject to the rules of richer countries .
As a consequence, an important part of your resources is usually used to pay interest on debts . This is because
the reforms imposed to maintain financing are not adequate to promote sustained growth of the local economy.
Trade relations are usually for the export of raw materials and the import of industrialized products . The lower
the dependence on foreign industries, the higher the level of development of the country.

 Politics
The political unstable usually because of their economic dependence on central countries. Internal struggles
between different ideologies can prevent a stable and lasting project.
On the other hand, if this trend is interrupted and the political situation stabilizes, decisive measures can be
taken that either benefit or harm economic development . In other words, economics and politics affect each
other, and their interaction is vital for the development of the country.

 Poverty
Poverty is always a central problem in developing countries , because even when development is underway, the
economic benefits are not evenly distributed throughout the company .
In other words, an important sector of society continues to live in conditions similar to those of an
underdeveloped country. These sectors can suffer hunger, social exclusion , limitations in access to health
services and education
2. Demand for imported goods
Technology is progressing rapidly and increasingly disrupting production patterns around the world. A recent
World Bank study shows that the increasing application of industrial automation, modern robotics, and smart
factories is transforming the manufacturing process and changing work. Imports by developing countries of
these new technologies can boost productivity, drive down costs, and support the speed of technology diffusion
and catch-up. The technologies, however, create risks for those countries to the degree that they might be labor-
saving and replace low-skilled jobs . Although imported new technology poses risks to low-skilled workers,
there is less consensus on its overall effects on employment. As machines are good at routine tasks, demand for
mainly routine jobs will fall. Manual workers are likely to be displaced. From a different perspective, machines
improve productivity and lower the price of goods and services, which raises demand for them. Increased
demand calls for hiring additional workers, which could compensate for the displacement effect from
automation . The greater use of machines and technology increases demand for skilled workers and relocates
task assignments amongst employees. Whilst machines might reduce the number of traditional manufacturing
jobs, new service jobs will be created

1. The demand for the capital and the participation of international credit
Demand for the capital
Developing countries have many economic goals and the need to build modern infrastructure, so the need for
investment capital in these countries is extremely large for economic development.
In addition, developing countries often have heavy industry and outdated technology while the world's trend is
to use modern and environmentally beneficial technologies for economic development. In order to be able to
effectively transfer economic structure, developing countries need large capital resources to carry out the
transfer process.
Especially during the COVID-19 pandemic, developing countries do not have enough technology or resources
to produce and distribute vaccines effectively, and also face many economic difficulties, which disrupts the
supply of vaccines. Therefore, in this period, developing countries need more investment sources to recover and
develop their economies and contribute to the international financial environment.

Participation of international credit

Credit activities ensure capital needs for production and business needs, capital consumption needs for
individuals in developing economies, these economies have not yet achieved efficient resource allocation. . The
distribution of credit capital has contributed to the regulation in the entire economy, facilitating the production
process to be continuous.
In addition, international credit is also a bridge between savings and investment, a driving force to stimulate
savings and a means of providing capital for development investment. In a commodity-producing economy,
credit is one of the sources of fixed and working capital formation of enterprises. Therefore, credit has
contributed to encouraging materials to go into production, promoting the application of scientific and technical
advances to production to speed up the remanufacturing process.
Particularly in the current conditions of developing countries, the economic structure is still unbalanced,
inflation and unemployment are still high. Therefore, through credit investment, it will contribute to the
arrangement and reorganization of production, forming a reasonable economic structure.
On the other hand, through credit activities, using labor and raw materials appropriately, promoting economic
growth, and contributing to solving social problems.
- International credit is a financing tool for underdeveloped economic sectors and spearhead industries to create
a basis and attract other economic sectors.
The basic feature of credit is that it operates on a return and interest basis. Therefore, credit activities have
contributed to stimulating the effective use of loans. By such an impact, it is required that enterprises in the
developing economy pay attention to improving the efficiency of capital use, reducing production costs,
increasing the turnover of capital, creating favorable conditions for business growth. enterprise benefits.
Research Question:
1. Current status of international balance of payments in Vietnam 2015-2017 and personal views
on measures to overcome
Vietnam currently has a relatively strong balance of payments (BOP) position and this is a good basis
for the stability of the VND as well as the SBV's flexibility in management against external risks
 Like every country, Vietnam has faced growing economic challenges caused by the Covid-19 pandemic,
and many forecasters say it could be much more serious than the global financial crisis. demand in 2008-2009.

Recently published figures show that the negative effects of the Covid-19 pandemic are becoming more
and more obvious. Accordingly, exports in April dropped sharply, up to 13.9% over the same period, the main
reason was a 26% decrease over the same period in textiles and apparel and footwear. This is not surprising, as
data shows that some orders from the US and EU - which account for about 60% of Vietnam's garment exports
- have been canceled or delayed. There is conflicting data on electronics, as while phone exports fell 35% year-
on-year, computer-related shipments grew 18% in April. This shows demand for non-telephone electronic
products (e.g. computers) remains relatively stable.
The manufacturing sector is facing increasing headwinds. This is evident in the fact that the PMI in
April dropped at a faster rate, falling to a new record low of 32.7 points, signaling a more gloomy outlook in the
manufacturing sector and showing that the blow of Covid-19 into the manufacturing sector is getting stronger.
Key indicators, such as employment, new orders, new export orders, etc., have fallen to their lowest levels since
the PMI survey was conducted in 2011, reflecting weaker demand. Alarmingly, for the first time, manufacturing
enterprises have had a pessimistic view of production prospects in the coming year.
With external headwinds intensifying and signs of weakness in domestic demand, HSBC has revised its
2020 Vietnam GDP growth forecast lower than previously forecast. "However, Vietnam is the only economy in
ASEAN that we forecast will continue to have positive growth in 2020," HSBC economist Yun Liu said.
Resist external risks
However, the good news is: Vietnam's BOP is in a relatively strong position, increasing its ability to
protect against external risks. Thanks to sustained FDI inflows, the surplus capital account provided support to
maintain the overall BOP surplus. Meanwhile, a rapidly growing trade surplus and rising remittances have also
helped shift the current account from deficit to surplus.
Since 1996, Vietnam has maintained a BOP surplus for most of the year. Especially in 2019, Vietnam
had a record-high BOP surplus of $23 billion, or about 9% of GDP. Looking at the increase of this BOP, it can
be seen that the driving force behind the surplus BOP has changed somewhat. If in the period before 2011, the
large capital balance surplus was the main contributor, in the period after 2011, the change of the current
account from deficit to surplus was the factor that helped move the BOP to a position with a surplus. large
residual.
After a few years of declining FDI, Vietnam has seen a resurgence in FDI since 2013. Efficient FDI
inflows into export industries also helped move Vietnam's current account into a favorable position. thereby
helping to change the situation of Vietnam's BOP in recent years. Besides, with its emergence as an electronics
assembly hub, Vietnam has seen a growing trade surplus. Vietnam's electronics exports have grown from US$3
billion (4% of total exports) in 2008 to US$87 billion (33% of total exports) in 2019. As a result, the level has
helped. Vietnam's trade surplus hit a record high of $11 billion, pushing Vietnam's current account surplus to
the equivalent of 5% of GDP last year.
Furthermore, a growing secondary income surplus has also supported a favorable current account
position. A large amount of that comes from remittances that are constantly being remitted. Remittances have
grown steadily over the past two decades, making Vietnam the fourth-largest recipient in Asia, with remittances
worth $16.7 billion (6.4% of GDP) in 2019.
Vietnam's efforts towards a more favorable BOP position over the past few years have translated into a
rapid accumulation of foreign exchange reserves. Currently, Vietnam's foreign exchange reserves have reached
about 84 billion USD, equivalent to 4 months of imports, much better than in the previous period. High foreign
exchange reserves have contributed to improving the prestige of Vietnam's position in the eyes of foreign
investors; at the same time, helping VND to maintain a stable state. Even this year, the outbreak of the Covid-19
pandemic pushed the dollar up quite strongly, at one point the dollar index rose to 102.82 points, the highest in
the past 3.5 years. However, the foreign exchange market and domestic exchange rate remained stable. VND
only depreciated slightly. “We forecast that the VND could depreciate by 1.2% against the USD this year
(compared to the same period last year), leading to our year-end forecast for the exchange rate to be at 23,450,”
HSBC forecasts. newspaper.
Agreeing with this forecast, many experts believe that the pressure on inflation has decreased in April.
Besides, with a flexible exchange rate management mechanism, plus abundant foreign exchange reserves, the
domestic exchange rate will be maintained at a basically stable level.

Advantages and disadvantages of Fundamentals of

exchange rate
1. Fixed exchange rate regime
Advantages of Fixed Exchange Rate
Beneficial for Importers and Exporters – As fixed exchange rates provide certainty, it is beneficial for importers
and exporters and it is because certainty is needed for international trade and there are fewer chances for
speculation.
Lower Risk in International trade – When fixed exchange rate is maintained, by agreeing fixed price of
products, there is a lower chance for risk in trade. It will also encourage the traders to invest in the markets.
Beneficial for domestic markets and employees – By maintaining a fixed exchange rate, domestic organizations
and employees can maintain their costs under control to cope up in the international market; it will lead to
inflation under control. By maintaining this for the long run, Interest rates should be down and increase trade
and investment opportunities.
Introduces discipline in economic management – Fixed exchange rate gives opportunities to the government to
form following inflationary policies, and it will lead to a competitive market. This will help in situations such as
balance of payments.
Reduce the risk of destabilizing the economy – The fixed exchange rate is reducing speculation, it is very risky
for business in a stable market. And by reducing the speculation will lead to reducing the risk of destabilizing
the economy when the exchange rate is fixed.
Beneficial for investment – The vital benefit of a fixed exchange rate is that an organization can plan the
amount of investment and business that organization gets in future. There is no risk of losing more money as it
reduces the speculation in exchange.

Disadvantages of Fixed Exchange Rate

No automatic balance of payments adjustment – The floating exchange rate is useful to deal with disequilibrium
with interference of the national government, and it does not affect the domestic economy also. If a situation
arises such as a deficit then it leads the organization to be competitive again. The problem should be solved by
reducing the level of aggregating demand, when a fixed exchange rate is used. And as demand of products less,
will cause less consumption of imports and the price of products falling down and would make organization
more competitive.
Large amounts of foreign reserves are required – In order to maintain a fixed exchange rate, governments have
to have large amounts of foreign reserves required, and it will lead to opportunity costs to have these reserves.
When the exchange rate is maintained artificially by the government, and it is not up to its level of the economic
condition, the development is not up to its level or in other words not efficient as the rate has adjusted. As the
interest rate is directly related to the exchange rate, it can stop economic growth in case of their disparity to
market needs.
Stability of Fixed Exchange rate – The government who adopts fixed exchange rate has followed diverse
policies, and it may be inflationary sometimes. It creates some problems such as the countries which will have
low inflation and it will be very competitive and high inflation and uncompetitive in some countries, have to
devalue.
Loss of liberty in internal policy – The need for a fixed exchange rate is dominating policy, sometimes it may
not be good for the economy at this position. The value of the exchange rate should be set by interest rates and
other factors; It would be rather than more beneficial to the problems such as unemployment and inflation
which are macro objectives.
The main disadvantage of a fixed exchange rate is that it will cause problems to the economy to speculate
attacks. When a situation arises such as excess supply and demand in national or other currency, and if the
government is unable to maintain it, at that time the fixed rate needs to be changed, and it will reduce credibility
of currency.
Globalization, innovation, and technical development plays a dominant role in the recent world. These
processes increase the opportunity of international trade. The economy should be flexible with these progresses,
the both fixed exchange rate and floating exchange rate has advantages and disadvantages. Fixed exchange rate
is preferable for those countries in which internal factors will create problems to the economy and floating
exchange rate is beneficial to those countries in which there are more external shocks.

1. Floating exchange rate regime

-Advantages
Market Determined Rates: Freely floating exchange rate means that the market will determine the rate at which
one currency can be exchanged for another. The market will set these rates on a real time basis as and when new
information flows in. This reduces the need for an elaborate mechanism to ensure that the exchange rates
remain within a particular range.
Fixed exchange rates require the Central Banks to set up trading desks and currency boards to manage the
currency actively on a daily basis. In case of a floating exchange rate, the central bank does not have to take so
many efforts. Instead, it can just passively manage the currency by setting important rates and interfering in the
market only when it becomes necessary.
Independence: Freely floating exchange rates allow the governments and central banks of a nation to have a
great degree of independence. In case of fixed exchange rates, the Central banks of different nations have to act
in tandem. This is because the monetary policy that they set could influence or be influenced by the economic
conditions of member nations. For instance, when the dollar raises its interest rates, all currencies pegged to it
also have to make necessary changes. Hence, the countries that have their currencies pegged to the dollar have
limited independence whereas countries that let their currencies float have a far greater degree of independence.
Less Probability of Speculative Attacks: A freely floating currency faces adjustment on a minute to minute
basis. There are some days that the currency faces rapid appreciation whereas others when it faces rapid decline.
However, for most of the days, the currency remains stable.
The point is that speculative attacks happen only when the currency remains stagnant at a given point whereas
its underlying fundamentals have changed. It is then that the speculators see an opportunity to bring the
currency to its equilibrium point quickly and make a quick buck by doing so.
Low Requirement of Reserves: A freely floating exchange system does not require the central bank to hold
massive reserves. This is because the Central Bank does not have to conduct active trading operations in order
to maintain the value of the currency. Central Bank operations are a very rare event for countries that have a
floating rate system. This is a major advantage of this system since holding foreign exchange for trading
purposes is an expensive strategy. Firstly, it requires the country to maintain a huge currency reserve. Then, it
also requires the central bank to have an active trading desk 24 by7! The floating rate system is simply a lot
more convenient since it does not have any such requirements.
-Disadvantages
The freely floating currency system also has its critics. They suggest that the system has a few serious flaws.
Some of the important ones have been listed below:
Uncertainty: Firstly, a freely floating currency rate implies a lot of volatility. The value of currencies change on
a real time basis. Also, since the Forex market is not regulated, currency values could skyrocket or hit rock
bottom in a matter of minutes. In the short run, traders find it difficult to engage in foreign trade since they are
not aware of the exact prices that their goods will fetch them. Movements in the currency market can cause a
significant dent in the profits of companies which indulge in foreign trade. However, these risks can be
managed with tools like hedging.
Allocation of Resources: At a macro level, the economy faces a problem while allocating resources. This is
because as exchange rates change so does the benefit that can be derived from resources. For instance, a rising
exchange rate makes imports a better option whereas a falling rate makes exports easier. Hence, if the exchange
rate keeps fluctuating, the country cannot really create a long term strategy and stick to it. The allocation of
resources is optimized in the short run. However, in the long run, this allocation seems to be ad-hoc since it
does not follow any given plan.
Lack of Discipline: Lastly, freely floating exchange rates only make sense if the country has sufficient internal
control mechanisms in place. Hence, if there is likelihood that the monetary policy may be misused for personal
gains by a group of influential people, then it is better to peg the currency to another more developed currency.
In this way, fiscal discipline is imposed on the economy. Freely floating currencies provide independence.
However, independence can only be utilized if the economy is disciplined enough.
It is for this reason that a lot of third world countries prefer to peg their monetary policy to major currencies like
the dollar or the euro.
3.Regulated-floating exchange rate regime
Ads:
Unlike the free float approach, the dirty float protects investors against rapid exchange rate fluctuations. It also
provides a more stable investment environment, protects the country from the risk of large exchange rate
movements, and mixes market-determined exchange rates with a non-rule-based stabilizing intervention by the
central bank, which helps avoid potential crises.
Disads:
The dirty float approach has disadvantages in that the government may manipulate the exchange rate for the
benefit of its own country at the expense of another currency merely because this exchange rate regime does not
offer transparency. In addition, the dirty float system requires cooperation between exchange rate policy and
monetary policy that may lead to conflict; the country’s central bank often cannot determine whether a
movement in the rate is short term or long term, thus whether an intervention is warranted; there are no definite
rules giving credibility to the monetary authorities to intervene; and such a system may not place constraints on
monetary and fiscal policy, resulting in a clash with the exchange rate policy.
Factors affecting exchange rate
1. Inflation
Inflation is the relative purchasing power of a currency compared to other currencies. For example, it might cost
one unit of currency to buy an apple in one country but cost a thousand units of a different currency to buy the
same apple in a country with higher inflation. Such differentials in inflation are the foundation of why different
currencies have different purchasing powers and hence different currency rates. As such, countries with low
inflation typically have stronger currencies compared to those with higher inflation rates.
2. Interest Rates
Interest rates are tightly tied to inflation and exchange rates. Different country’s central banks use interest rates
to modulate inflation within the country. For example, establishing higher interest rates attracts foreign capital,
which bolsters the local currency rates. However, if these rates remain too high for too long, inflation can start
to creep up, resulting in a devalued currency. As such, central bankers must consistently adjust interest rates to
balance benefits and drawbacks.
3. Public Debt
Most countries finance their budgets using large-scale deficit financing. In other words, they borrow to finance
economic growth. If this government debt outpaces economic growth, it can drive up inflation by deterring
foreign investment from entering the country, two factors that can devalue a currency. In some cases, a
government might print money to finance debt, which can also drive up inflation.
4. Political Stability
A politically stable country attracts more foreign investment, which helps prop up the currency rate. The
opposite is also true – poor political stability devalues a country’s currency exchange rate. Political stability also
affects local economic drivers and financial policies, two things that can have long term effects on a currency’s
exchange rate. Invariably, countries with more robust political stability like Switzerland have stronger and
higher valued currencies.
5. Economic Health
Economic health or performance is another way exchange rates are determined. For example, a country with
low unemployment rates means its citizens have more money to spend, which helps establish a more robust
economy. With a stronger economy, the country attracts more foreign investment, which in turn helps lower
inflation and drive up the country’s currency exchange rate. It is worth noting here that economic health is more
of a catch-all term that encompasses multiple other drivers like interest rates, inflation, and balance of trade.
6. Balance of Trade
Balance of trade, or terms of trade, is the relative difference between a country’s imports and exports. For
example, if a country has a positive balance of trade, it means that its exports exceed its imports. In such a case,
the inflow of foreign currency is higher than the outflow. When this happens, a country’s foreign exchange
reserves grow, helping it lower interest rates, which stimulates economic growth and bolsters the local currency
exchange rate.
7. Current Account Deficit
The current account deficit is closely related to the balance of trade. In this scenario, a country’s balance of
trade is compared to those of its trading partners. If a country’s current account deficit is higher than that of a
trading partner, this can weaken its currency relative to that country’s currency. As such, countries that have
positive or low current account deficits tend to have stronger currencies than those with high deficits.
8. Confidence/ Speculation
Sometimes, currencies are affected by the confidence (or lack thereof) traders have in a currency. Currency
changes from speculation tend to be irrational, abrupt, and short-lived. For example, traders may devalue a
currency based on an election outcome, especially if the result is perceived as unfavorable for trade or economic
growth. In other cases, traders may be bullish on a currency because of economic news, which may buoy the
currency, even if the economic news itself did not affect the currency fundamentals.
9. Government Intervention
Governments have a collection of tools at their disposal through which they can manipulate their local exchange
rate. Primarily, central banks are known to adjust interest rates, buy foreign currency, influence local lending
rates, print money, and use other tools to modulate currency exchange rates. The primary objective of
manipulating these factors is to ensure favorable conditions for a stable currency exchange rate, cheaper credit,
more jobs, and high economic growth.

Question related to the practice in VietNam

2. Exchange rate regime in Vietnam
The exchange rate regime of the Vietnamese dong is a managed floating rate regime
That is the provisions of Decree 70/2014/ND-CP detailing the implementation of a number of articles of the
Ordinance on Foreign Exchange and the Ordinance amending and supplementing a number of articles of the
Ordinance on Foreign Exchange just promulgated by the Government. and will take effect from September 5,
2014.
The Decree clearly states: In the territory of Vietnam, all payment and remittance transactions for current
transactions of residents and non-residents are freely performed in accordance with the provisions of the
Decree. this and other relevant laws according to the principles:

Firstly, residents and non-residents are allowed to buy, transfer and bring foreign currencies abroad to serve
payment and money transfer needs for current transactions.

Second, residents and non-residents are responsible for presenting documents as prescribed by credit institutions
when buying, transferring and bringing foreign currencies abroad to serve current transactions and take
responsibility before law for them. authenticity of papers and vouchers presented to authorized credit
institutions.

Third, when buying, transferring or bringing foreign currency abroad for current transactions, residents and
non-residents are not required to present documents related to the confirmation of fulfillment of tax obligations
with the State. Vietnam
 CHAPTER 2: INTERNATIONAL MONETARY SYSTEM
Q1: Characteristics and role of the international financial system for the development of countries
-International monetary system is characterized by the multilateral cooperation of countries based on a regulated
floating exchange rate regime, the whole trend of integration and globalization of countries
-Activities of international financial institutions were strengthened and expanded in many fields of life -
economic – society of countries
-The development and stability of the European Monetary System since 2005
-The possibility monetary cooperation in regions and the world: Southeast Asia, South East Asia expansion and
Asia
 ROLE:
-The IMF has seen its role affirmed, its governance structures reformed, and its capacity enhanced. It has
demonstrated effectiveness in global crisis management and has new measures aimed at fostering resilience.
The IMF’s global role notwithstanding, the trauma of financial shocks and lingering concerns about the terms of
IMF conditionality have spurred Asian efforts to create their own financial safety nets to address balance-of-
payments and short-term liquidity problems. The economic shutdown caused by the COVID-19 pandemic is
posing still greater liquidity problems for many developing nations and some developed economies as well.
-The IFS conducts research on the impact of a range of specific interventions related to early child development,
health, nutrition, skill acquisition and education, sanitation, credit and insurance, anti-poverty transfers, labor
markets, consumption, and tax and benefits reforms in developing countries.
Q2: European Monetary Union: The advantage, existence and implications of the research matter?
 Existence
On Jan. 1, 1999, the European Union introduced its new currency, the euro.1
The euro was created to promote growth, stability, and economic integration in Europe. Originally, the euro was
an overarching currency used for exchange between countries within the union. People within each nation
continued to use their own currencies.Within three years, however, the euro was established as an everyday
currency and replaced the domestic currencies of many member states. The euro is still not universally adopted
by all the EU members as the main currency. However, many of the holdouts peg their currencies to it in some
way.
After February 28, 2002, the euro became the sole currency of 12 EU member states, and their national
currencies ceased to be legal tender. Other states subsequently adopted the currency. The euro is represented by
the symbol €.
 Implications ( xem phần này)
- For a long time the Monetary Union was mainly considered an internal European issue and external
consequences were largely ignored. In contrast to most previous analyses, this paper looks at a number of
international implications of monetary union. It is argued that several factors could contribute to the euro
becoming an international currency in the future and a competitor to the US dollar in this respect. The degree of
uncertainty attached to this outcome, however, remains considerable and in any event the emergence of the euro
as a major international currency is likely to take some time. Given the expected size of the euro-zone and the
likelihood of the euro becoming an international currency, fiscal and monetary policies in the area are likely to
have a significant impact on the macroeconomic environment in the rest of the world. An important issue is
how will monetary union affect major bilateral exchange rate developments and their volatility
-The monetary union has contributed to greater cross-border trade in finance and goods, delivering effi- ciency
gains from market integration. Over a sustained period of time, a more integrated European economy will also
become better-suited to a single currency.
 Advantage
-Promoting Trade:
The main benefits of the euro are related to increased trade. Travel was made easier by removing the need for
exchanging money. More importantly, the currency risks were eliminated from European trade. With the euro,
European businesses can easily lock in the best prices from suppliers in other eurozone countries. That makes
prices transparent and increases the competition between firms in countries using the euro. Labor and goods can
flow more easily across borders to where they are needed, making the whole union work more efficiently.
-Encouraging Investment:
The euro also supports cross-border investments within the eurozone. Investors in countries using foreign
currencies face significant foreign exchange risk, which can lead to an inefficient allocation of capital. Although
stocks also have exchange rate risks, the impact on bonds is far greater because of their lower volatility. The
prices of most debt instruments are so stable that exchange rates influence returns far more than interest rates or
credit quality. As a result, foreign currency bonds have a poor risk-return profile for most investors.

Before the euro, successful companies in countries with weak currencies still had to pay high interest rates. On
the other hand, less efficient firms in nations with stable currencies enjoyed relatively low interest rates. The
primary risk in lending across borders was the currency risk, instead of default risk. With the euro, investors in
low interest rate countries, such as Germany and the Netherlands, were able to lend money to firms in other
eurozone countries without currency risk.
-Mutual Suppor:
In theory, the euro should help countries that adopt it to support each other during a crisis. The currencies of
countries with larger economies tend to be more stable because they can spread risk more effectively. For
example, even a prosperous small Caribbean country can be devastated by a hurricane. On the other hand, the
U.S. state of Florida can turn to the rest of the United States to help rebuild after a hurricane. As a result, the
U.S. dollar is one of the most stable currencies in the world.
-The global crisis tested mutual support within the eurozone in 2020. Initially, there was not enough collective
action. Even worse, many nations closed their borders to each other. However, the European Central Bank
consistently brought up enough debt in affected countries, especially Italy, to keep interest rates relatively low.
More importantly, France and Germany supported a recovery fund worth over 500 billion euros.3
Q3:Opportunities for regional monetary cooperation in Southeast Asia and Asia?
-The theory of the comparative optimal monetary area, the benefits and costs of forming a monetary union and
establishing the conditions for the countries to have a common currency. Theoretically In this regard, the
economic interdependence between.
-TThe larger the member country, the greater the benefit from the cut will reduce transaction costs as well as
promote intra-regional trade and investment. Job member countries are equally affected to respond to economic
shocks or have goals -The same policy will reduce the cost of policy coordination. Capital flexibility and
workers in each member country as well helps reduce the need for adjustment through exchange rate policy.
Degrees of political cooperation and Political commitments also play an important role in building regional
institutions for policy coordination.
-Many studies have analyzed the Different aspects of building a monetary union. The development of trade and
investment linkages over the past two decades has increased rapid economic interdependence between ASEAN
economies. In 2009, Intra-regional trade and investment accounted for 25% of total trade trade and 10% of
foreign investment of these economies ASEAN economy.
-Along with trade and investment links policy, the similarity of policies between the ASEAN's economy also
facilitates the process of monetary cooperation. ASEAN economies all use the exchange rate peg to the USD in
different levels. Low inflation and stability pricing in ASEAN economies as well certain facilitation of key
coordination currency and exchange rate books. Besides the similarity in goals and macroeconomic policy, the
economy ASEAN also pursues development strategies similar development on the basis of promotion export
and attract foreign investment, also such as specializing in the export of certain manufactured products such as
electronics. The similarity of muscle economic structure implies that regional economies will be similarly
affected by economic shock.
-Flexibility of the labor market in ASEAN countries also creates favorable conditions for policy coordination.
Labor is also relatively flexible between countries, including the movement of workers across borders. The
liberalization of movement for skilled workers is also set as a way of building the ASEAN Economic
Community.
Q4: Operations and the role of international financial institutions entitled to Vietnam
 Operations
- All international financial institutions use country strategy documents, as these are the basic documents for
establishing the institution's lending preferences for a particular country. This document is written based on the
international financial institution's own vision with the long-term development of each country to offer
appropriate support programs.

- The support strategy begins with analyzing the causes of people's poverty and identifying key areas where
international financial institutions can most effectively intervene to reduce that situation. This establishes the
foundation for the future activities of international financial institutions.

- The formulation of a national strategy involves extensive discussions with a wide range of stakeholders. These
discussions are crucial to the success of the strategy because they promote cooperation and coordination among
different countries.

- All projects financed by an international financial institution are carried out by the borrowing country, not by
the institution providing the funds. However, all borrowers must follow the rules and procedures of the
international financial institution throughout the entire project cycle. This is to ensure efficiency and
transparency in the use of international financial institution funds.

Chapter 3: The balance of payments

1. Analyze the factors that impact on the trade balance . Current status of the trade balance in Vietnam .
1.Inflation: Inflation increases prices and costs. As prices and costs in any country rise rapidly, domestically
produced goods soon become more expensive than similar goods produced abroad. This reduces exports,
increases imports. Thereby affecting the balance of trade.
2.Commodity prices: When the prices of domestic goods are high relative to foreign goods, the demand for
imports will increase, which affect the balance of trade
3. Productivity : An increase in domestic productivity will lead to more competition for domestic goods than for
imports, thereby increasing the demand for domestic goods and reducing the demand for imported goods.
Thereby affecting the balance of trade.
4. Exchange rate: An appreciation of the domestic currency significantly increases the cost of exported goods,
so the quantity of exports will decrease and affect the trade balance.
5. Trade policy: Trade barriers or supportive policies also affect a country's balance of exports and imports. For
example, when there is an export subsidy, a country will export more and affect the balance of trade.
6. Income : Increased income increases the demand for goods, including imported goods. This causes a country
to import more and affects the balance of trade.

2. Analysis of the impact of the balance of international payments under the different perspectives and
meanings of research problem

As the international balance of payments in surplus

 Increase import of consumer goods and production materials to improve living standards and conditions
of domestic production
 Reduce exports, especially exports of raw materials to maintain national resources and environmental
protection
 Increase export of capital to overseas to take advantage of efficient use of capital and increase the
influence and to promote market expansion
 Increase in international reserves, redemption of debt.

As the balance of payments in deficit

 Operate the international trade policy towards increasing export, import restrictions: limited economic
support policies
  Operating the direction of fiscal policy toward tightening state budget: policy "austerity"
 Operation of monetary policy in the direction of tightening the money supply
 Monetary devaluation to boost exports and reduce imports: Limits of currency devaluation
 Reduce international reserves through the sale of valuable papers and export gold
 Borrow money from foreign funds to pay expenditures and payments at maturity: Reschedule debt and
the increase in debt (deficit) in long-term

Chapter 4: Fundamentals of exchange rate (DVi)

1. Basis for determining exchange rates
 Current international exchange rates are determined by a managed floating exchange rate
 For many years, floating exchange rates have been the regime used by the world's major
currencies – that is, the US dollar, the euro area's euro, the Japanese yen and the UK pound
sterling.
1. Factors affecting exchange rate
 Changes in demand and supply of foreign currency in the moment
 Income and expected inflation in a country
 Changes in labor productivity of a country
 The change of trade policy
 The impact of the international financial markets
1. International financial activities exchange rate risks
 Exchange rate risk refers to the risk that a company’s operations and profitability may be
affected by changes in the exchange rates between currencies.
 Companies are exposed to three types of risk caused by currency volatility: transaction exposure,
translation exposure, and economic or operating exposure.
 The risks of operating or economic exposure can be alleviated through operational strategies and
currency risk mitigation strategies.
 In the current globalized market, exchange rate risk affects not only multinationals and
businesses that trade in international markets, but also small and medium-sized enterprises.
1. Assignment to identify cross exchange rates
 A cross rate by definition may be any exchange of any two currencies that are not the official
currency of the country in which the quote is published.
 In practice, any currency exchange in which neither of the currencies is the U.S. dollar is
considered a cross rate.
 One of the most common cross currency pairs is the euro and the Japanese yen.
 An exchange rate between the euro and the Japanese yen is considered to be a commonly quoted
cross rate because it does not include the U.S. dollar. In the pure sense of the definition,
however, it is considered a cross rate if it is referenced by a speaker or writer who is not in Japan
or one of the countries that use the euro as its official currency. While the pure definition of a
cross rate requires that it be referenced in a place where neither currency is used, the term is
primarily used to reference a trade or quote that does not include the U.S. dollar.
 Examples of Major Cross Rates: Any two currencies can be quoted against each other, but the
most actively traded cross currency pairs are the euro versus the British pound, or EUR/GBP,
and the euro versus the Japanese yen, or EUR/JPY. The euro is the base currency for the quote if
it is included in the pair. If the British pound is included but the euro is not, the pound is the
base.
 Examples of Minor Cross Rates: Cross rates that are traded in the interbank market but are far
less active include the Swiss franc versus the Japanese yen, or CHF/JPY, and the British pound
versus the Swiss franc, or GBP/CHF. Cross rates involving the Japanese yen are usually quoted
as the number of yen versus the other currency, regardless of the other currency.
Chapter 5: The foreign exchange market (MHa)
Q1: Forex Market: Concepts, structure, roles of participating entities
- Concepts:Foreign currency and foreign exchange
The concept of the foreign exchange market: is the place where activities buying and selling foreign currencies
and foreign currency funds
The essence of the foreign exchange market is the international currency market
- Structure: Foreign currency and foreign exchange
The concept of the foreign exchange market: is the place where activities buying and selling foreign currencies
and foreign currency funds
The essence of the foreign exchange market is the international currency market
- Roles of participating entities: Transaction of demand and supply of foreign currency to satisfy different needs
of the foreign currency to meet the demand for payment capability, reduce risk in operations of foreign currency
exchange business
The basis of formation and rating regulation
Tools to control and regulate the movement of short-term capital flows in foreign currencies

Q2. The spot trading activities and foreign exchange derivative transactions. The meaning of the research
problem for the management of the foreign exchange market in Vietnam
-The transactions on the spot market
Spot trading activities
Controlled purchase operations
Ac-bit operations (Arbitrages)
Other business operations
-The derivative foreign exchange market
Trading operational contract by term (Forwards Contracts)
Trading operational contract by future ( Futures contracts)
Operation of currency swaps (Swaps)
Trading operational contract by options (Options)
- The mean

Q3. Foreign currency trading activities of Vietnamese commercial banks

The rate of devaluation of VND against USD tends to decrease over time. In 2020, the rate of devaluation of
VND against USD has decreased to 0.69% from nearly 2% in 2019, and in 2021 VND tends to appreciate
against USD. If at the end of December 2020, the market exchange rate was still at 23,215 VND/USD, by the
end of September 2021 people and businesses only need to spend 22,860 VND to be able to buy 1 USD.
Notably, the appreciation of the VND against the USD in 2021 takes place in the context of the USD
appreciation in the international market, and at the same time, Vietnam has a trade deficit due to enterprises
importing raw materials to hoard when the price is not high. goods increase. The reason for the VND
appreciation during this time may be because the State Bank of Vietnam (SBV) wants to reach an agreement
with the US Department of Finance on Vietnam's monetary policy, so that the US side can take Vietnam out of
the list. policy of countries that are considered to be manipulating exchange rates, while minimizing the risk of
Vietnam being imposed trade restrictions. In addition, the VND appreciation may be due to the SBV's
unwillingness to buy more USD, leading to an increase in the money supply and increasing inflationary
pressure.
Q4: Managing the activities of the emerging foreign exchange market in the world and in Vietnam
 in the world
- Experts are concerned that new variants of the SARS-CoV-2 virus that spread at a fast rate will continue to
have a wide-ranging negative impact on the global forex market. 80% of analysts polled said volatility in the
forex market will increase over the next 3 months, for both traditional majors as well as emerging ones.
Meanwhile, the US central bank (FED), which is now expected by traders to raise interest rates next March and
start reducing its asset holdings soon after, will provide policies to help the dollar benefit. compared to most
other major currencies. At present, the US greenback may still have the upper hand even if the US central bank
is not necessarily determined to raise prices at source with interest rate solutions.
Among the emerging currencies polled, the Chinese yuan is projected to depreciate by nearly 2% in 2022; The
Malaysian ringgit and the Indian rupee are also expected to weaken by about 1%; The Turkish lira is forecast to
fall 14% this year; The South African rand is forecast to remain in range for the next 6 months, but down
0.4%...Most major currencies are unlikely to be able to offset the 2021 devaluation in the short term. within the
next 12 months. The EUR is forecast to rebound by less than 1.5% by the end of 2022, after having depreciated
by nearly 7% in 2021 compared to 2020. The Japanese Yen is expected to trade around current levels and The
Swiss Franc (CHF) is down about 3% this year. Meanwhile, the USD was very strong at the end of 2021 mainly
due to the widening interest rate differential and the decreasing momentum of inflation in the US compared to
other markets such as Japan and Europe...

Among the emerging currencies polled, the Chinese yuan is projected to depreciate by nearly 2% in 2022; The
Malaysian ringgit and the Indian rupee are also expected to weaken by about 1%; The Turkish lira is forecast to
fall 14% this year; The South African rand is forecast to remain in range for the next 6 months, but down
0.4%...Most major currencies are unlikely to be able to offset the 2021 devaluation in the short term. within the
next 12 months. The EUR is forecast to rebound by less than 1.5% by the end of 2022, after having depreciated
by nearly 7% in 2021 compared to 2020. The Japanese Yen is expected to trade around current levels and The
Swiss Franc (CHF) is down about 3% this year. Meanwhile, the USD was very strong at the end of 2021 mainly
due to the widening interest rate differential and the decreasing momentum of inflation in the US compared to
other markets such as Japan and Europe...
 Vietnam
Firstly, Vietnam continues to maintain a steady growth of trade balance with a surplus. The growth of total
export turnover of over 20% of Vietnam in 2021 really impresses the market and investors.
Secondly, Vietnam will continue to attract strong foreign capital flows in 2021 through activities to attract
direct investment in production and business, and indirect investment activities in the capital market with an
increase in capital market share. Spectacular growth in liquidity and value of the stock market, accompanied by
exciting mergers and acquisitions (M&A) activities… have added an abundant supply of foreign currencies to
the foreign exchange market.
Third, remittances are also a factor that positively affects the exchange rate in 2021 with sales continuing to
grow from all continents with overseas Vietnamese and Vietnamese labor force. This cash flow fully
compensated for the decrease in foreign currency revenue from tourism activities.
Fourth, funding from international financial institutions for credit and economic institutions in Vietnam also
adds a strong foreign currency supply in 2021.

The above factors have supported the stable operation of the foreign exchange market, and the management
agency continues to strengthen the national foreign exchange reserve fund. In 2022, we believe that Vietnam
will continue to maintain the stability of the foreign exchange market with the possibility of positive growth
from international trade activities, attracting investment on the next macro basis. continued stability and a series
of trade agreements came into force in depth.

Chapter 6: International capital markets (HA)

Q1.Analyse the role of international capital markets for the stability and economic development of the
country
The capital markets are a network of specialized financial institutions, series of mechanism, processes
and infrastructure that in various ways facilitate the bringing together of suppliers and users of medium
to long-term capital. Capital markets connect the monetary sector with the real sector, which is the sector
of the economy concerned with the production of goods and services. Considering this role in the
economy, the capital markets play an important role in economic development as they facilitate growth in
the real sector by giving producers of goods and services, and entities tasked with infrastructure
development. access to long-term financing.
The fundamental channels through which capital markets are connected to the economy, economic growth and
development can be outlined as follows:

 Creating a Bridge Between Suppliers of Capital and Users: The contact between agents with a
monetary deficit and the ones with monetary surplus can take place directly through direct financing, but
also through a financial intermediary in form of indirect financing, which is a situation whereby specific
operators facilitate the connection between the real economy and the financial market. In this case, the
financial intermediaries could be banks, investment funds, pension funds, insurance companies, or other
non-bank financial institutions,
 Promoting Saving and Investments: The capital markets increase the proportion of long-term savings
(pensions, life covers, etc.) that is channeled to long-term investment. Capital markets enable the
contractual savings industry (pension and provident funds, insurance companies, medical aid schemes,
collective investment schemes, etc.) to mobilize long-term savings from small individual household and
channel them into long-term investments. It fulfills the transfer function of current purchasing power, in
monetary form, from surplus sectors to deficit sectors, in exchange for reimbursing a greater purchasing
power in future. In this way, the capital markets enable corporations to raise funds to finance their
investment in real assets. The implication will be an increase in productivity within the economy leading
to more employment, increase in aggregate consumption and hence growth and development. It also
helps in diffusing stress on the banking system by matching long-term investments with long-term
capital. It encourages broader ownership of productive assets by small savers. It enables them to benefit
from economic growth and wealth distribution, and provides avenues for investment opportunities that
encourage a thrift culture critical in increasing domestic savings and investments that translate to
economic growth,
 Facilitating Efficient Allocation of Scarce Financial Resources: The capital markets facilitate the
efficient allocation of scarce financial resources by offering a large variety of financial instruments with
different risk and return characteristics. This competitive pricing of securities and large range of
financial instruments allows investors to better allocate their funds according to their respective risk and
return appetites, thereby supporting economic growth,
 Financing Utility and Infrastructure Development: The capital markets also provide equity capital,
debt capital and infrastructure development capital that have strong socio-economic benefits through
development of essential utilities such as roads, water and sewer systems, housing, energy,
telecommunications, public transport, etc. These projects are ideal for financing through the capital
markets via long dated bonds and asset backed securities. Infrastructure development is a necessary
condition for long-term sustainable growth and development. In addition, capital markets increase the
efficiency of capital allocation by ensuring that only projects that are deemed profitable can successfully
attract funds. This will, in turn, improve competitiveness of domestic industries and enhance ability of
domestic industries to compete globally, given the current momentum towards global integration. The
result will be an increase in domestic productivity which may spill over into an increase in exports and,
therefore, economic growth and development,
 Financing Private Public Partnerships, “PPPs”: Capital markets promote PPPs, thereby encouraging
participation of private sector in productive investments. The need to shift economic development from
public to private sector to enhance economic productivity has become inevitable as resources continue to
 diminish. It assists the public sector to close the resource gap, and complement its effort in financing
essential socio-economic development, through raising long-term project-based capital. It also attracts
foreign portfolio investors who are critical in supplementing the domestic savings levels and who
facilitate inflows of foreign financial resources into the domestic economy, thereby supporting economic
growth.

Q2: Development trends and operation control of international capital markets

This year, the world has been facing uncertainties that require careful navigation by market participants,
governments, and central banks. The conflict in Ukraine has created severe geopolitical fragility on a scale not
seen in Europe for decades. It heightens risks and also adds further pressure on energy prices, supply chains and
inflation across Europe and beyond.
As UK financial services adjust to operate post-Brexit, the new regulatory framework looks to promote market
infrastructure, product, and technology innovation, aiming to attract investment and support competitiveness of
the sector, as well as the government’s net-zero transition target and wider societal ESG objectives.
Global capital markets had successfully transitioned into the post-LIBOR era, while continuing to manage
impacts of the pandemic on the economy, manifesting in price volatility and significant inflationary pressures
on firms and central banks, which have made multiple interest rate hikes inevitable across jurisdictions.
1 The macroeconomic environment

Governments and central banks of major economies responded with unprecedented relief packages to support
businesses and consumers during pandemic lockdown periods, and successfully averted a lasting global
recession.
Financial resilience and faster recovery in many sectors enabled growth in asset prices, but lockdown of the real
economy caused significant disruption to supply chains and energy reserves, especially gas, as demand
normalised.
With soaring inflation levels not seen in decades, the relative contribution from demand and supply factors is
still uncertain. Central banks are challenged to balance monetary policy intervention to curb inflation and risk of
damaging fragile economies, with heightened uncertainties due to the Ukraine crisis, as well as the course of the
pandemic.
2. Refocusing for growth
Despite the emergence of new COVID-19 variants slowing the transition to more normal times, many financial
institutions are refocusing their business strategies for growth. In part, this is where cost reduction strategies
have achieved most of the easier saves, but also where revised business strategies are repointing resources and
energies on new markets, products and opportunities.
3. Innovation
Distributed Ledger technology is coming of age with many of the major market infrastructure providers now
actively participating in experiments and many banks are developing pilot solutions with both conventional and
new asset classes while central banks continue to look at Central Bank Digital Currencies (CBDCs)
In the technology space:
Cloud enabled big data allows for more sophisticated models and tailoring of products and is of value to the
complex climate models. The EU Commission’s Digital Finance Strategy brings opportunities for market
infrastructure innovation based on distributed ledger technology (DLT), whilst their EU’s more conservative
stance on cryptoassets could create competitive advantage for the UK.
The rapidly changing landscape is creating significant opportunities for innovation driven by three primary
forces: technology, the ESG agenda, and potential regulatory optimisation.
4. Adoption of digital
COVID-19 has forced a rapid reassessment of ways of working and created challenges for banks with the need
to monitor the distributed workforce. Coupled with more of a cloud first mindset, this is driving a rapid re-
architecting of the core desktop estate. Those firms with extensive virtual infrastructure were able to adapt
rapidly.
Q3: Analyse the current status and the ability to participate in international bond markets of Vietnam
and measures to limit the burden of foreign debt through the issuance of government bonds abroad.

4. Analyse the ability of listed companies of Vietnam on foreign

stock markets and the significance of the research problem.
From 2007 to 2020, there were a number of companies that launched cross-listing plans, of which only Hoang
Anh Gia Lai JSC successfully listed global custody certificates (GDRs) at SGDCK London.

However, in order to implement cross-listing in foreign markets with often stricter listing standards than the
domestic market, listed enterprises will face many disadvantages such as the cost of listing, maintaining listing,
cultural and language barriers, or the issue of cross-listing will adversely affect the psychology of investors.
Theoretical basis

The group of factors influencing the company's cross-listing decision is studied and tested in many international
stock markets, including: factors belonging to the company's characteristics (size, business strategy, ownership
structure, business lines), target stock market (market size, market characteristics, regional culture), domestic
stock market (development level, level of segmentation with the target market) and a number of other factors
such as investment taste, political motivation,... The article will focus on the receiving group of factors
belonging to the characteristics of the company to assess the ability of vietnamese listed enterprises to cross-list
through the ability to meet the financial requirements of foreign stock exchanges.
Research methods

To predict whether a company will be able to cross-list (whether or not to meet listing conditions at SGX) in the
following year, use the Cox Harzard model to estimate the occurrence of cross-listing decisions.
conclude
Using data on the finances and ownership structures of companies currently listed on HOSE between 2014 and
2018, it includes 305 companies with sufficient research data in different business sectors. With the group of
listing conditions at SGX, the company data is arranged accordingly in accordance with one of the listing
conditions. The results of the study found a relationship between factors belonging to the financial
characteristics and ownership structure of the business to the ability of companies to cross-list at SGX of
companies currently listed on HOSE. In which total assets and ROA play an important role that has a positive
impact on the ability to list in SGX
For the target group on the ownership structure, the ownership rate of foreign investors was found to have a
positive impact on the probability of cross-listing, if the company's foreign ownership rate increased by 1%, the
possibility of cross-listing would increase by 61.5%. The ownership ratio of large shareholders makes no sense
in the model, this result may be due to limitations in terms of assuming dependent variable selection based on
financial conditions.

Recommendations
For listed companies, when there is a plan to cross-list shares, there should be preparation of listing conditions,
such as market value size, revenue, profit to ensure listing conditions. Because financial conditions will often be
the most basic conditions when you want to submit a listing application. Besides, improving financial indicators
such as total assets, ROA is necessary to increase the possibility of international listing. For the group of
enterprises that use too much debt, it will limit the ability to raise more capital in the international market
through listing. Therefore, proving good debt repayment ability and improving financial leverage is important
when the company plans to cross-list.

For market regulators, in order to support companies planning to list securities on international stock exchanges,
there should be specific regulations detailing how to make listings. In particular, the regulation on the rate of
foreign ownership needs specific guidance because of some possible problems. Firstly, trading securities in
domestic and foreign markets will lead to a change in the ratio of foreign ownership, when the foreign room is
still controlled, each increase and decrease of the ownership rate of foreign investors in the domestic market
will affect the number of shares in the international market. Secondly, increasing the foreign room is partly a
decision on the part of the company, partly because of the limitations in the regulations on the business lines
that the company registers. Uniform regulations on classification standards and creating conditions for
companies to change business lines in accordance with regulations on foreign rooms should be of interest to
management agencies.

5.Analyse the ability to invest in shares of foreign companies listed

on the stock exchanges in Vietnam and significance of the research
problem.

after nearly 35 years of Vietnam attracting foreign investment since the first Law on Foreign Investment was
enacted (1987), there have been many FDI enterprises investing in Vietnam. On April 15, 2003, after 15 years
from the opening date for foreign capital inflows into Vietnam, the Government issued Decree No.
38/2003/ND-CP allowing some FDI enterprises to convert their operating forms from limited companies to joint
stock companies, while allowing these joint stock companies to be listed on the stock market.
Regarding the status of listing on the stock market of FDI enterprises, according to the State Securities
Commission, in the period of 2003 - 2008, 10 FDI enterprises were approved to convert from limited companies
to joint stock companies and listed on the stock market. Specifically, Taya Vietnam Wire and Cable Joint Stock
Company (JSC) listed in 2005, Chang Yih Ceramic Tile JSC (2006), International Food JSC (2006), Full Power
JSC (2006), Tung Kuang Industrial JSC (2006), Taicera Ceramic Industry Jsc (2006), Royal International Jsc
(2007), Mirae JSC (2008), Tay Ninh Successful Sugar Cane Jsc (2008), Everpia JSC (2010). After this period,
there is one more FDI enterprise listed as Siam Brothers Vietnam JSC (2017), this enterprise was established
and operated under the Law on Enterprises and the Investment Law 2014. Thus, since the policy of allowing
these joint stock companies to be listed on the Vietnam Stock Exchange, there have been 11 FDI enterprises
converted from limited liability companies to joint stock companies and listed on the stock exchange. However,
the State Securities Commission said that so far, only 8 FDI enterprises are listed, 3 FDI enterprises delisted due
to loss-making business activities (including 2 companies that are registering to trade on UpCom).

MIDTERM

No 1:
Part 1 : ( 3 points) Choose the correct answer and give the brief explanation
1.1 . Singapore Company X 's foreign currency bonds issued to the U.S. market , worth $ 100 million. How is it
reflected in the international balance of payments of Singapore?
a) Credited in the balance of long-term capital
b ) Debited in the balance of long-term capital
c ) Credited in the balance of short-term capital
d ) Debited in the balance of unilateral current transfers

=> A
Issuing foreign currency bonds is for the purpose of raising capital in this case Singapore X company collects
$100 million, which increases Singapore's foreign
currency resources and will credit
 1.2 . Suppose the rate of inflation in the U.S.is higher than in Vietnam , this will affect supply, demand ,
exchange rate of the VND :
a) Supply of VND will fall , demand of VND will increase , and VND’s value will increase
b ) Supply of VND will rise , demand of VND will decrease , and VND’s value will decrease
c ) Supply of VND will fall , demand of VND will increase , and VND’s value will decrease
d ) Supply of VND will rise , demand of VND will reduce , and VND’s value will increase

=> A
When the rate of inflation in the United States exceeds that in Vietnam, the value of the
dollar falls in relation to the value of the Vietnamese dong. As a result, the demand for VND will
rise, and the value of VND will rise as well.

1.3 . The following factors will affect the inflow of direct investment into a country
a) The political issues of that country
b ) The political risk
c ) War , Civil War
d ) All of the above answers

=> D
If a country has political issues and goes to war or causes war. That country's economy
would be unstable because the government would prioritize political output. As a result, the most
mischievous will accept to invest in that country. A country with a stable political environment
will attract more foreign investment.

OR
All of three factors negatively impact a country, then increase
the investment risk. Therefore, FDI investors will not invest in countries having
political problems or war.

1.4 . On the foreign exchange market

a) The market participants agree to buy or sell foreign currency in the future at an agreed price today
b ) The market participants agree ( disagree) to sell foreign currencies in the future at an agreed price today
c ) The members in the market pay today to receive a certain amount of foreign currency in the future
d ) The market participants agree to buy and sell a fixed amount of foreign currency at spot prices which will be
announced in the future

=> C
Answer c describes the most prevalent aspects of the international market, whilst the other
responses are about options. Answer a and d are spot options while answer b is forward option.

1.5 . To perform the balance of international payments balance which is in deficit, The government will
implement the following measures:
a) Lower interest rates to encourage consumers
b ) Encourage to invest abroad
c ) Implement policies to reduce import duty of goods
d ) Perform adjustment to increase the exchange rate

=> D
Because interventions are not required in the case of a floating exchange rate. A change in the exchange rate
under a floating system corrects an imbalance between supply and demand in the private Forex. In a floating
system, there can never be an imbalance in the balance of payments.

1.6 . United States , the European Community Union and some other countries against China which
maintained a policy of " weak CNY " , because :
a) Concerned China’s export power
b ) Concerned trade deficits , and unfair competition in exports to China
c ) Both answers are correct
d ) No answer is appropriate

=> C
A drop in the value of the CNY reduces the value of Chinese items while increasing
Chinese exports. This has ramifications for the market and DS. China has warned the United States that it faces
unfair competition in its exports to China.

OR

Devaluing your currency makes your products cheaper abroad.

It also makes foreign products more expensive inside your country. These
increase your exports and lower your imports. This puts the USA and other
cOuntries at a disadvantage by increasing its trade deficit against China.