Foreign-invested companies in Vietnam usually earn foreign currency from exports but pay wages, land rent and services in Vietnamese dong (VND); in the reverse direction, companies selling domestically earn VND but import materials in foreign currency. The VND is managed under a central-rate mechanism with a trading band of ±5 percent around the central rate published by the State Bank, so the risk is not free-float volatility but step adjustments and seasonal foreign-currency supply-demand gaps. From 18 August 2026, Circular 38/2026/TT-NHNN replaces Circular 06/2019/TT-NHNN and renames the direct investment capital account into the investment capital account (ICA) — every capital transaction of the investor must pass through this account, and it is also the starting point for designing lawful currency hedging.
Short answer
Currency hedging tools in Vietnam come in four layers: forward contracts with commercial banks; foreign-currency options at some banks that offer them; swap transactions for balancing cash flows in two currencies; and, above all, natural hedging — matching revenue and cost flows in the same currency. Vietnam’s foreign-exchange derivatives market is shallower than Singapore’s or Hong Kong’s, with longer tenors and complex option structures more limited, so the practical strategy is a combination: the investment capital account (ICA) to keep capital flows compliant, forwards for predictable cash flows, and natural hedging for the long-term structure.
The legal framework of investor cash flows
The Investment Law 143/2025/QH15 guarantees investors the right to transfer lawful assets abroad after completing financial obligations to the State. On that basis, foreign-exchange law requires investment capital, foreign borrowing and repayment, and profit remittance to pass through an investment capital account (ICA) opened at a licensed bank — under Circular 38/2026/TT-NHNN effective from 18 August 2026, replacing Circular 06/2019/TT-NHNN (the account’s former name was DICA). Using the wrong account for a capital transaction is an error usually discovered only when the company remits profits or divests, at which point the entire flow file is blocked for review. For derivatives, the State Bank’s rules on foreign-exchange transactions require companies to evidence a real foreign-currency need with underlying contracts and documents; this is why forwards in Vietnam are tied closely to genuine trade flows rather than speculation.
Three hedging layers and how to choose
Natural hedging: the cheapest and most durable layer
The principle is to match the currency of revenue with the currency of costs and debt: exporters should borrow in the currency they earn, negotiate domestic material purchases in VND as far as possible, and hold lawful foreign-currency balances matched to upcoming payment obligations. This layer costs no transaction fee and creates no settlement risk, but it must be designed when commercial contracts are negotiated — not something the finance department can retrofit alone later.
Forwards: locking rates for certain cash flows
A forward contract locks the buying or selling rate of foreign currency on a set future date. Its cost is not a separate fee but the forward-rate differential, reflecting the interest-rate gap between VND and the foreign currency. Forwards fit best with highly certain cash flows such as import payment schedules over three to six months; they are not suited to locking an entire year of forecast revenue, because order volatility creates an over-hedged position.
Options and combined structures: use selectively
Some banks in Vietnam offer foreign-currency options that let a company keep the upside when rates move favourably. However, option premiums, documentation conditions and tenors in the Vietnamese market are considerably tighter than in international financial centres. Companies should use options only when the finance team can price and control them; complex derivative structures whose maximum-loss mechanics the board cannot explain must be avoided entirely.
Risks and practical notes
The first risk is using the wrong account channel for capital transactions, causing profit remittance under Circular 38/2026/TT-NHNN to be blocked. The second risk is that a forward must still be settled when the underlying cash flow changes — a cancelled order does not cancel the forward contract. The third risk is over-hedging when export revenue falls, turning a protective tool into a reverse speculative position. The fourth risk sits in accounting: the accounting method and tax treatment for derivative transactions must be aligned with auditors from the start to avoid year-end discrepancies. Finally, do not build a hedging policy on the assumption that the VND moves in only one direction; the VND has had periods of appreciation, and treasury policy must be written down with target hedge ratios and clear limits instead of following individual market hunches.
Action checklist
- Open and use the correct investment capital account (ICA) under Circular 38/2026/TT-NHNN for all capital transactions, foreign loans and profit remittance.
- Write a documented treasury policy: target hedge ratio, maximum tenor and position limits.
- Build a rolling 12-month foreign-currency cash-flow forecast by month, separating certain and forecast flows.
- Apply natural hedging before buying derivatives: match borrowing, purchasing and revenue currencies.
- Obtain derivative trading limits at at least two banks to compare quotes for each large transaction.
- Match forward terms against actual payment schedules and order-cancellation clauses in commercial contracts.
- Prepare complete evidence of genuine foreign-currency need for each transaction as banks require.
Frequently asked questions
What tools can help me hedge VND exchange rate risk?
Four main tools: natural hedging by matching revenue, cost and borrowing currencies; forward contracts for certain cash flows; foreign-currency options at some banks where upside participation is needed; and exchange-rate sharing clauses in commercial contracts with counterparties. Swap transactions support two-currency cash-flow balancing in some borrowing structures. All underlying capital flows must pass through the investment capital account (ICA) under Circular 38/2026/TT-NHNN.
How much does hedging cost, roughly?
A forward carries no separate fee — its cost is the forward-point differential formed by the interest-rate gap between VND and the foreign currency at the time of the deal, so it changes with tenor and market. Options carry a premium calculated as a percentage of notional value, varying with tenor and rate volatility. There is therefore no fixed price table that applies generally; the correct method is to take competitive quotes from at least two banks for each specific transaction.
Which bank in Vietnam provides this service best?
This article does not rank a single “best” bank, because quality depends on the derivative limit granted to your own company. Large domestic commercial banks and foreign bank branches in Vietnam all provide forwards and foreign-exchange services. The practical selection criteria are: derivative trading limits, maximum accepted tenor, quote spreads, treasury advisory capability and documentation handling — and companies should keep relationships with at least two banks to avoid depending on a single limit.
FLAT Law Firm accompanies investors
FLAT Law Firm helps investors review foreign-exchange compliance for their Vietnam capital structure — opening and operating the investment capital account (ICA) under Circular 38/2026/TT-NHNN, foreign loan files and profit remittance — before the company signs hedging transactions with banks. If your cash flows run through several different accounts or your profit remittance file has been queried by the bank, contact FLAT to standardise the capital-flow documentation.
This article has been quality-reviewed by the FLAW AI Legal Council
