Foreign exchange in Vietnam: The true face of the market and the questions investors need to answer

The foreign exchange market has existed for a long time, associated with international trade activities. However, for Vietnamese investors, Forex remains a field full of questions and uncertainties—especially regarding legal issues. This article will answer key questions: Is Forex legal? What is the true nature of the foreign exchange market? Should you participate or not?

What is Forex? Understanding the market’s nature

The foreign exchange market is a decentralized global trading system, with no central exchange in any country. Unlike stock markets with official exchanges, forex trading is conducted through brokerage companies on OTC systems (over-the-counter trading).

This market has distinctive features: a daily trading volume of up to 6.6 trillion USD (according to 2020 statistics), making it the most liquid market worldwide. With its large scale and numerous participants, the forex market cannot be manipulated by any individual or organization.

Who are the players in the market?

Initially, forex was a playground for central banks, large financial institutions, and import-export companies. They use this tool to hedge against exchange rate fluctuations, protect against inflation, and store value during economic instability.

As international trade grew strongly, individual investors began to take an interest in Forex as a diversification tool. Although the trading volume of individual investors is much smaller than that of financial organizations, the appeal of high liquidity and continuous price volatility is attracting more and more participants.

Is Forex legal in Vietnam? Clarifying the legal situation

This is a question many Vietnamese investors care about.

In Vietnam, the government maintains strict control over foreign exchange reserves. Only licensed banks are authorized to conduct official forex transactions. Forex trading platforms operating as commercial entities have never been legalized by Vietnamese law. Therefore, there are no official Vietnamese Forex platforms.

However, it is important to understand that: the fact that the government does not license forex trading platforms does not mean that trading Forex is illegal. Individuals are fully permitted to conduct forex transactions for investment purposes.

Vietnamese investors can still access international trading platforms through reputable, licensed brokers authorized in countries where Forex is permitted. The key is that these brokers must have licenses from reputable regulatory bodies in the country where they operate.

Avoid “Forex brokers licensed by Vietnam”—these are definitely scams, as Vietnam does not authorize such activities.

The most actively traded currency pairs

According to the Bank for International Settlements (BIS) survey in April 2019, EUR/USD leads with over 24% of the trading volume. This is the largest and most preferred currency pair.

Next are USD/JPY (13.2% volume) and GBP/USD (9.6% volume)—both are key currency pairs in the forex market.

Top 10 most traded currency pairs

Which economic news affect Forex?

Each currency has its own factors, but five key economic indicators impact all currency pairs:

1. Central bank interest rate decisions
Interest rates are seen as the price of the currency. Raising interest rates → currency appreciation, lowering interest rates → currency depreciation. This is the most influential factor on price movements.

2. Gross Domestic Product (GDP)
Higher-than-expected GDP usually leads to currency appreciation, while lower GDP than forecast can exert downward pressure.

3. Consumer Price Index (CPI) and inflation
These are indirect measures of currency value. High CPI or inflation often prompts central banks to raise interest rates to curb inflation.

4. Unemployment rate
An increasing employment rate usually leads to upward pressure on interest rates. Investors pay attention to the US ADP and NFP reports monthly.

5. Announcements from FOMC meetings (US)
The Federal Open Market Committee meets monthly to set interest rates. Announcements here can cause significant market volatility—for example, on March 18, 2015, EUR/USD surged 400 pips within minutes after the announcement.

Forex trading hours and main trading sessions

When each trading session opens, the currency pairs characteristic of that region tend to have more volatility. For example, when Sydney opens, AUD is lively; when London opens, European currency pairs are actively traded. You can trade Forex almost 24 hours a day, 5 days a week through a single platform.

Should you participate in Forex? Important notes

Legal considerations are crucial for Vietnamese investors deciding whether to trade Forex. Currently, Vietnamese law does not clearly regulate this field.

Remember:

• Forex platforms operated by Vietnam are illegal
• Trading Forex through authorized foreign platforms for personal investment is not illegal
• Choosing reputable, licensed brokers authorized in countries where Forex is permitted is essential

Forex is the world’s largest financial market, offering attractive profit opportunities thanks to high liquidity and continuous price volatility. Vietnamese individual investors can participate if they choose trustworthy partners.

To trade confidently without legal worries, thoroughly research the history, licenses, and reputation of the broker before opening an account.