1 Đồng – South Vietnam

In 1960, South Vietnam's currency, the đồng (VND), was a relatively new instrument of sovereignty, having been introduced just five years earlier in 1955 to replace the French Indochinese piastre. Issued by the National Bank of Vietnam under President Ngô Đình Diệm's government, its establishment was a key part of nation-building efforts, symbolizing a break from the colonial past. However, the currency operated within a fragile and dualistic economy, split between a nascent urban commercial sector and a vast, often insecure, rural subsistence sector. Its stability was artificially propped up by substantial American economic aid, which financed a large trade deficit and helped maintain foreign exchange reserves.

The currency's fundamental weakness stemmed from the South Vietnamese government's chronic budget deficits, driven primarily by high military and security expenditures in the escalating conflict with the communist insurgency (the Viet Cong). With a narrow domestic tax base, the government resorted to deficit financing—effectively printing money—which generated persistent inflationary pressures. While inflation in 1960 was moderate compared to the hyperinflation that would cripple the economy later in the war, it was a growing concern, eroding public confidence and purchasing power. The economy remained heavily dependent on imports, and the đồng's fixed exchange rate was maintained through controls and U.S. dollar injections rather than robust export earnings.

Furthermore, the currency situation was complicated by the realities of a country at war. In rural areas contested by the Viet Cong, the authority of the South Vietnamese state and its currency was often weak. The insurgents levied their own taxes and sometimes issued scrip or used barter, creating zones of parallel economic activity. Thus, in 1960, the South Vietnamese đồng was less a symbol of unified economic strength and more a benchmark of the state's administrative reach and its dependence on American financial support to maintain a facade of stability amidst deepening political and military turmoil.