People rush to sell gold, banks get benefit

The growing tendency of people rushing to sell gold for dong has commercial banks rejoicing, because this has helped banks attract big volumes of deposits.

As the gold prices keep rising, continuously breaking new height records, people have been rushing to sell gold. Two thirds of the people say they will use the sums of money from gold sale to deposit at banks.

Khoi, one of the people, who queued up for selling gold at a big gold shop on Tran Nhan Tong Street on July 19, said that there are only two safest ways of preserving assets, either keeping gold or depositing at banks.

“My daughter is now working for a bank. She said banks now offer very high deposit interest rates in order to lure more depositors, and told me to sell gold for dong to deposit at banks,” Khoi said after receiving 39.4 million dong from selling one tael of gold.

Quang, an officer of a state agency, also said he wanted to sell two taels of gold for dong to deposit at banks. “I am not a big investor, and I do not have much idle money. Therefore, I cannot do anything with the money except depositing at banks,” he explained.

Meanwhile, commercial banks, in order to attract cash flow, have raised the deposit interest rates by 0.5 percent per annum on average.

Giang, an officer of a state owned bank on Kham Thien street in Hanoi, said that many more big depositors have appeared in the last two or three days, who deposit hundreds of millions of dong, or several billions of dong. “Many of them said they got the money from selling gold,” Giang said.

“The current interest rates are 17-17.5 percent per annum for one or two month term deposits worth 100 million dong and more,” she added.

The noteworthy thing is that banks now only offer high interest rates for short term deposits, while medium and long term deposits get lower interest rates. An officer of a bank located on Lang Ha Street in Hanoi, said her bank is offering the interest rate of 18 percent per annum, an increase of 0.5 percent, for the deposits worth 300 million dong and more. However, depositors would get only 15.5 percent at maximum for two or three month term deposits.

The officer explained that the bank only offers high interest rates for short term deposits, because the market changes regularly. She also said that 15.5 percent per annum proves to be a “safe interest rate” in the current context of regular changes.

The same situation can be seen in HCM City. The officer of a bank on Vo Van Tan street in district 3, said that about 4-5 people in every 10 clients, who came to the bank to make transactions on July 20 afternoon, made deposits.

She affirmed that the number of depositors has unexpectedly increased over the last few days. “Everyone deposited only tens or hundreds of millions of dong, but the total sum of deposits was satisfactory,” she said.

Director of a joint stock bank in HCM City has revealed that the dong deposits at his bank increased by five percent on July 20.

General Director of Viet A Bank Pham Duy Hung has also confirmed that the volume of capital mobilized from the public has increased slightly. He also thinks that the deposits have increased because people have got more money from gold sales.

Economists have predicted that with the growing tendency of people selling gold for dong to deposit at banks, the money supply in the national economy would increase, thus helping ease the deposit and lending interest rates. As such, the interest rate decreases would be visible in the near future.

At this moment, depositing money at banks is the top choice of investors. A recent survey conducted by VnExpress showed that 33 percent of readers chose depositing as the top investment channel. Meanwhile, buying dollars is not their favorite choice any more.

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