Nguyen Van Binh, governor of the State Bank of Viet Nam, announced yesterday that he would allow more bullion imports if necessary to stabilise the overheated domestic gold market and to keep prices stable.
"Measures will be applied to control the distance between domestic and global prices, somewhere under VND400,000 (US$19.21) per tael," Binh said, adding that if the price disparity was allowed to widen, it would encourage manipulation and speculation. One tael is equivalent to 1.2 ounces.
The domestic price per tael is currently VND1-VND1.2 million higher than the global price.
Spot gold yesterday soared to an all-time high above US$1,910 as persistent worries about global economic growth burnished bullion's safe-haven appeal.
Sai Gon Jewellery Co (SJC), Bao Tin Minh Chau, Agribank Gold and Jewellery Co (AJC), Sacombank Jewellery Co (SBJ), Phu Nhuan Jewellery Co (PNJ) and Doji quoted prices ranging from VND48.55-VND49.09 million ($2,331-2,357) per tael.
Each day for more than a week, the gold price has hit new highs, leading to the forecast that it would eventually reach VND50 million per tael on the domestic market and $2,000 an ounce globally.
Viet Nam was a major gold consumer. Most of the bullion in the country was imported. Diminutive gold reserves were unable to significantly affect the market, Binh said.
The country's gold consumption increased by 2 per cent, reaching 19.2 tonnes during the first quarter of 2011; demand for gold was valued at $878 million, a 28 per cent increase compared to the same period last year, according to a World Gold Council report.
On August 9, the central bank set major gold dealers an import quota of five tonnes. About three tonnes has already come into the country to meet sudden strong demand, which has driven the domestic price up 3.6 per cent to VND46 million ($2,203) per tael that morning.
The bank's move led to prices immediately falling to about VND45 million per tael, but the decline was only temporary.
The Governor yesterday said that balancing imports and exports to stabilise the gold price was just a temporary measure. In the long run, the central bank planned to adopt comprehensive policies to stabilise the market.
Binh said the central bank was putting the final touches to a decree regulating gold trading. The draft, which has been sent to ministries for feedback, limits gold trading and bullion production and stipulates that the bank would be responsible for allocating business licences.
Under the draft, the number of gold dealers allowed to trade gold bullion will be cut to make it easier to manage the gold market.
The new Governor is also mulling ways to mobilising idle gold resources to improve national reserve levels.
Binh estimated that Vietnamese individuals and firms were holding 300-500 tonnes of gold. He said that if the central bank mobilised gold via credit institutions, it could acquire an additional 130 tonnes, worth $10 billion.
The US dollar today is worth VND20,820 at banks and VND21,750 on the high street. Since the beginning of April, the central bank has purchased $6 billion for foreign reserves. — VNS