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Vietnam suspends gold imports on trade gap
Vietnam, Asia’s second-largest gold investor, has suspended gold imports in June due to a widening trade gap, a World Gold Council (WGC) official said Monday, as the country battles with double-digit inflation.
Traditionally, Vietnamese use gold for savings, jewelry and real estate transactions, but when inflation is high many choose gold or the US dollar to hedge against inflation.
“The government is very concerned. They have to reduce the trade balance deficit. Gold is one of the main imports,” said Huynh Trung Khanh, a consultant for the Vietnam chapter of World Gold Council.
“So far, Vietnam has imported 60 tons of gold, with the value of US$1.8 billion (January-May). They have to temporarily suspend imports.
The central bank has temporarily suspended fold imports until further notice, Khanh said.
Vietnam’s annual inflation rate hit 25.2 percent in May, while the trade deficit has tripled this year.
Following a year of overheating and high credit growth, 2008 has been strained for Vietnam, where macroeconomic stability was taken for granted as it boasted one of the world’s highest growth rates, averaging 7.5 percent a year since 2000.
Speculation the dong will be devalued has weighed on the currency, while Vietnam stocks have fallen some 60 percent this year.
The country imported around 30 tons of gold in January-May Gin 2007, according to the W figures.
The central banks have given quotas to 40 banks and trading houses to import 73 tons of gold in 2008, up slightly from about 70 tons in 2007.
“They have required companies and banks which have not imported yet to remit back their remaining quotas to the central bank,” said q Khanh.
Gold powered to a record of $1,030.80 an ounce on March 17 on record-high crude oil, which raised fears of inflation and expectations of more rate cuts in the US, making the metal more attractive as an alternative investment.
Gold has since corrected and stood around $905.85 Monday.
“The suspension has been in place for some time,” said an official at the Vietnam Gold Traders Association, who asked not to be identified.
He did not provide a date for the suspension.
“Re-export of gold is not restricted but we have not seen any selling on the international market so far because a good, handsome profit can still be made in the local market,” the official said.
Burgeoning gap
Vietnam estimated its trade deficit would more than triple to $16.9 billion in the first half of this year as imports soared 64 percent, according to the Ministry of Planning and Investment.
The government is expected later this week to release full data on trade and inflation.
Imports in the first half of this year would surge to $45.5 billion while exports would rise 27 percent from the first six months of 2007 to $28.6 billion.
The trade deficit was $5.2 billion during the first half of last year while the full-year trade deficit was $12.4 billion, according to government data.
The Planning and Investment Ministry has forecast exports to rise 37 percent this year to $83 billion, above the government’s initial projection of 20-25 percent, but that the trade gap would widen to $30 billion.
Source: Reuters
Thanhnien
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