The politics of the greenback: the interaction between the formal and black markets in Ho Chi Minh City M A RT I N GAINSBO RO UGH
This chapter seeks to shed light on political relations in Ho Chi Minh City as they relate to activities in the city’s foreign exchange markets. It begins from the premise that access to and control over the US dollar, around which Vietnam’s foreign exchange markets revolve, constitute a highly political matter. In Vietnam there are two foreign exchange markets: the formal market and the informal market. In the formal market, the currency is allowed to fluctuate 0.1 per cent a day either side of the previous day’s closing rate on the foreign exchange interbank market. This so-called ‘crawling peg’ system, which was introduced in 1999, replaced a managed float system under which the currency was allowed to fluctuate in a narrow band either side of a fixed exchange rate set by the State Bank of Vietnam. The informal market is commonly referred to as the free market (thi truong tu do) or the black market (cho den). Naturally, the black market exchange rate is not administratively determined. It is also worth thinking of the black market not as a single market but as a series of markets or outlets spread across the city.