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Governor: Well managing gold trade, stabilizing dong the key goals
In the interview given to Thoi bao Kinh te Saigon, the newly appointed Governor of the State Bank of Vietnam, Nguyen Van Binh said setting up a perfect legal framework to effectively manage the gold market, and stabilizing the Vietnam dong value are the key goals of the monetary policies for the immediate time and long term as well.
Starting the conversation with a burning issue – the gold price escalation – Binh said:
The domestic gold price has unexpected become higher by 0.8-1.2 million dong per tael than the world’s price. This could be partially because of the speculation. We have planned to change the policies on gold management, but no changes have been made. Since April 2011, the domestic prices were always lower than the world’s prices. However, we can see changes in the people’s habit of hoarding gold: they know can choose the right time to sell gold out when the prices go high.
However, people have stopped selling gold. They now rush to purchase gold amid the price escalations…
There are two reasons behind the people’s decision to buy gold now. First, the international prices have been increasing dramatically, while experts all believe the prices would go up further. The forecast price increases have made people delay their sale plans, and prompted people to buy gold to hoard up in anticipation of the price increases.
Second, the speculators have been trying to set up the prices for the market, and they have decided to carry out their plan at the time when the international prices skyrocket.
What will the State Bank do to deal with the speculation?
Vietnam is not a gold producer, while it is really a normal thing if the domestic prices go up and down in accordance with the international prices. The task of the State Bank is to stop the speculation which causes losses to gold holders. While waiting for the new decree on gold trade management, the State Bank will have to ensure the supply and demand in balance, so that in all cases, the domestic prices should not be higher than the world’s prices.
How?
We have exported 40 tons of gold recently, which has brought a big sum of foreign currencies and helped stabilize the foreign currency market. Now the State Bank allows to import gold to ease the domestic prices (The central bank has allowed to import five tons and is likely to allow to import five more tons – reporter).
Some experts have attributed the recent gold price fluctuations to the new policy on imposing the export tariff of 10 percent on the jewelry with the gold content of 80 percent and higher. What do you think about that?
We are striving to build up a perfect legal framework on managing the gold trade which allows the market to perform in economic laws and allows us to control the market as well. There are many “sensitive issues” which we need to consider thoroughly.
There are no official statistics about the volume of gold kept among people. We think the figure is about 300-500 tons. We want to turn the gold into the capital that serves the national economy.
Could you please tell us about the new points in the gold trade management policy?
Under the draft decree on gold trade management, the State Bank of Vietnam is the only agency allowed to export gold. However, the bank can use its right in a flexible way. It can either to make export itself, or authorize some enterprises or credit institutions.
Do you mean that the central bank will define the gold prices, including the prices at which it buys gold from people, based on the international prices?
This is a controversial issue. The central bank may set up the regulations on the pricing, like the regulations on the exchange rate on the foreign currency market.
Regarding the exchange rate, the gold price fluctuations have had big influences on the exchange rate…
Stabilizing the value of the Vietnam dong is our key goal. Stabilizing, not fixing.
vietnamnet, TBKTSG
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