Energy Security and Exchange Rate Dynamics in Vietnam

Chuc Anh Tu, Ehsan Rasoulinezhad, Chi Thanh Ngo, Le Hoang Ba Huyen and Hanh Hoang Thanh

Chapter 10 in Energy Security, Transition, and Economic Growth, 2025, pp 201-216 from World Scientific Publishing Co. Pte. Ltd.

Abstract: This chapter empirically revisits energy insecurity in Vietnam, focusing on the role of the official exchange rate. Using data from 1985 to 2022 and applying the GMM estimator based on the 4A theory of energy security, we found that economic growth positively impacts the official exchange rate. CO2 emissions negatively affect the exchange rate, indicating an inverse relationship, while inflation negatively influences the exchange rate by increasing the cost of domestic products, which boosts import flows and depreciates the national currency. Additionally, energy intensity is negatively related to the official exchange rate. Our analysis also reveals that a 1% increase in gas imports is linked to a decline in the official exchange rate. This chapter recommends that Vietnam should diversify its gas imports, enhance local energy production, and improve energy efficiency to strengthen its currency against the USD and improve energy security.

Keywords: Energy Security; Energy Transition; Just Transition; Economic Growth; Green Growth; Sustainable Development; Renewable Energy; Green Finance; Climate Finance; Carbon Emissions Reduction; Carbon Markets; Energy Efficiency; Environmental Sustainability; Policy Recommendations; Regional Analyses; Country-Level Studies; Energy Intensity; Capital Efficiency; Solar Technology Adoption; Health and Pollution; Southeast Asia; Central Asia; OECD Countries; Developing Economies; Electricity Tariffs; Energy Governance; Fossil Fuel Dependency; Economic Resilience; Agricultural Energy Use; Virtual Power Plants; Energy Policies; Energy Economics; Energy Poverty; Clean Energy Transition; Financial Incentives; Global Energy Markets (search for similar items in EconPapers)
JEL-codes: O13 Q01 Q42 Q43 Q48 Q54 (search for similar items in EconPapers)
Date: 2025
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