Cao Sy Kiem, a member of the National Monetary Policy Consulting Committee, said free market bullion trading should be banned and the State Bank should manage the gold market towards concentrating gold imports for a positive impact on the forex market.
However, State Bank needs concretise suitable steps to avoid enormous impacts on the gold market.
What do you think about the impact of a ban on bullion trading?
I think that whether managing strictly gold market will positively affect the Vietnamese dongs’ status, so banning free market bullion trading is a necessary measure. Vietnamese people use not only dong, but also gold and foreign currency in business. Therefore, if government controls gold market as well as the forex market, it is easy to manage monetary policy. I expect that State Bank to have concrete guidance and actively schedule for prohibition of bullion trading to stabilise the gold market.
Will exchange rates fluctuate after a bullion trading ban?
I personally think that if government stabilises the gold market, then it will actively support to foreign currency market as well as exchange rate stabilisation. Actually, the gold market being unstable and domestic gold prices being higher than global gold prices caused a rising exchange in the free market and illegally gold import.
Moreover, when government strictly controls bullion trading through selective authorised importers then whether illegal gold import will be restricted. Thereby, the state can intervene more easily in gold market as well as balance demand and supply of domestic gold market, so avoid speculation and reduce the deficit.
Will the gold supply tightened as the gold market is narrowed?
At present, investors are waiting until the second quarter of this year when the State Bank issues concrete information about prohibition of bullion trading. Personally, I think that prohibition of bullion trading on free market will not affect the gold supply in Vietnam. When Vietnam has a demand for gold imports, the Sate Bank may carry out gold imports through selective authorised importers such as commercial banks in order to meet the demand of customers. Moreover, it is more safety for investors when gold transaction managed by the State Bank.
Domestic gold prices reduced slightly today, while global gold prices hit record prices last night.
The price of gold in Vietnam dropped to VND37.4 million ($1,807) per tael, down VND200,000 ($9.7) over the previous day on March 2. Gold was being purchased at VND37.3 million per tael and being sold at VND37.4 million per tael at most gold shops at 11am local time.
Sacombank Jewelry Company (SJC) was buying gold at VND37.32 million per tael and sold for VND37.42 million/per tael in Hanoi. At the same time Hanoi-based Phu Quy Jewelry purchase SJC-brand gold at VND37.37 million/per tael and sold at VND37.5 million/per tael.
The USD/VND exchange rate continued to decline this morning at free market after reducing sharply yesterday. Dollars were being bought at VND21,400 and sold at VND21,500, down VND250 against the previous day.
From the beginning of this year until now, domestic gold prices were often VND800,000 ($38.6) higher than global gold prices.
Internationally, global gold prices hit a record at $1,435 last night and silver advanced to the highest level since 1980 as turbulence in the Middle East boosting metal demand as haven investment and hedges against inflation.
Local gold price shaved off