Vietnam 20-ton gold fund: which banks to contribute?

The SBV, SJC and other selective commercial banks initiated to form a 20-ton gold fund to stabilize the market. However, the problem is who will contribute to the funds and how it will be managed.

The State Bank of Vietnam, the country’s central bank, Saigon Jewelry Company Limited (SJC) and other selective commercial banks initiated to form a 20-ton gold fund to stabilize the market. However, the problem is who will contribute to the funds and how it will be managed.

The gold fund is expected to bring some stability to the local market as 20 tons (or 530,000 taels) are much larger than the gold quota allowed by the SBV. Besides, it helps to limit the gold imports, which placed much pressure on the local exchange rate.

However, a specialist at the Ministry of Industry and Trade (MOIT) raised questions on banks’ willingness to contribute gold to the funds and its management mechanism.

Banks expect gold in the fund to yield higher than the current interest rate on gold deposits of 0.5%, he added, questioning that who will pay the yield.

The SBV is also expected to allow local banks to re-open their international gold trading accounts as a hedge against price fluctuations and sell gold in deposits to intervene the market. A manager of an unnamed bank judged the idea far to be realized, adding that gold quota is likely to be extended.

The total volume of gold deposit at banks is estimated at 100 tons, but banks are not allowed to sell them under the current regulation in the Circular No. 22/2010/TT-NHNN dated October 29, 2010.

Source Sophie/ News Writer/ StoxPlus

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

Posted by VBN on Oct 6 2011. Filed under Banking-Finance, Gold. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry