In this chapter we attempt to measure the value of the Vietnamese piaster, or dong (d), for the period up to 1972, when, for all practical purposes, it was allowed to float to seek its market value. Specifically, “international value” means the price of the piaster in terms of dollars or its exchange ratio. A method for deriving an approximation for the market value is laid out, rationalized, and employed later to compute a series called the “approximate market clearing rate of exchange” for the period 1964–70. Our calculated exchange rate series is then compared with a reported black market rate series. For those periods in which a marked difference is observed, an explanation is sought. Both series are then subjected to a test of consistency that utilizes national income data. Finally, a judgment is made on how the two rates, along with another derived from national income accounts, might be fused together to establish one series, the dollar “value of the piaster.” This series has already been used to translate piaster national income into its dollar equivalent, and it will be used subsequently in estimating the value of foreign aid to the Vietnamese economy.

9.1 The official exchange rate and misinformation

It is difficult to think of any major economic problem in wartime Vietnam that was not related in some way to the foreign exchange rate.