The number of searches from Vietnam for the word “forex” has been increasing gradually in the last five years, peaking in March this year, according to Google Trends data.
On Facebook, Vietnamese forex groups have hundreds of thousands of members who make hundreds of posts every day, with brokers touting returns of 30-60 percent a month.
Although the foreign exchange market has been around in Vietnam for long, it has never been legalized.
“The State Bank of Vietnam has not issued permits to any forex trading platforms,” deputy governor Dao Minh Tu said at a government press briefing on Thursday, adding that anyone trading foreign currencies is involved in illegal activities.
Industry insiders said the high leverage is what attracts many Vietnamese to forex despite the lack of a legal framework.
A forex investor has access to leverage of 20 times, meaning if they invest $100, the brokerage will let them trade up to $2,000.
This compares with 2:1 ratio on the stock market, which explains why many are drawn to forex.
Brokerages earn commission of 1.5-3 percent on each transaction.
Some operate like a pyramid scheme, promising higher rewards for investors who can get more new investors in.
Deputy Minister of Industry and Trade Do Thang Hai said his ministry has not issued multi-level marketing permits to any forex brokerage, and investors face legal and financial risks.
Those convicted of such illegal activity face a fine of up to VND5 billion ($216,400) or five years in jail, he said, adding that his ministry has provided evidence of illegal multi-level marketing forex activities to the Ministry of Public Security for investigation.
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