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This article measures the impact of exchange rate on Vietnamtrade balance in the shortand long term during the period of 2000-2010.Correlation analysisbased on the approach ofautoregressivedistributedlag method has been usedto measurelong-term effects. This analysis indicates that the trade balance has been enhancedasVietnam Dong(VND) depreciated.Error CorrectionModelbased on thelong-termbalance equationis usedto measure short-term effects, which suggests thatthe trade balance deterioratedas soon as VND depreciated.Impulseresponsefunctionbased on theerror correction modelindicates that VietnamDong’sdevaluation to thetrade balance behaved like J shape: The trade balancedeterioratesin three quartersafter thedevaluation, it commences to beimprovedfromthe 4th quarterand seta newequilibrium pointafter12quarters.