Gold accounts for 4pct-5pct of national foreign currency reserves

Gold accounted for 4pct-5pct of national foreign currency reserves, however this proportion is much smaller than the international average of 10.2 percent, which means the only instrument of the State Bank of Vietnam (SBV) for market intervention being gold import quotas for the time being.

According to an official of SBV Foreign Currency Management Department, it is such negligible stock of gold that has impeded government’s intervention into the market.

For many years since 1999, Vietnam’s gold stocks have only been maintained in an attempt to store their value so as to bolster the balance of payments under emergency circumstances.
Therefore, granting import quotas has been the single instrument deployed by SBV as yet.

Earlier in 2010, gold import quotas were lifted four times in effort to cool down the domestic gold fever, of which the third time was only four weeks away from the fourth one. The recent import of 5 tonnes of gold on 9 August has been the second allowance in 2011. Still, occasionally abnormal price hikes have made this measure decreasingly ineffective.

What is more, tightened gold import and export management mechanism coupled with restricted transactions on gold accounts have resulted in domestic prices’ failure to keep pace with the world prices which may perhaps trigger gold smuggling in the event of enormous international price fluctuations.

Vu Dinh Anh, economic expert of the Institute of Economy and Finance (Academy of Finance) while giving his views on the issue said that it now raises the national gold trading bourse for increased market’s professionalism and stability. Gold transactions would then be operating under the mechanism of continuous order-matching, under which gold prices would be determined by the market demand and supply impeding speculation as presently. SBV would be the founder, supervisor as well as manager of the entity. – NLD

Tags: vietnam gold, Vietnam gold market, Vietnam gold prices