Will the state bank of Vietnam unblock account gold trading?

The State bank of Vietnam, the country’s central banks, is expected to allow credit institutions to open account gold trading in an effort to pull down local gold premium.

The central bank has been trying to tame local gold frenzy and narrow local gold premium, including extending more gold quota for 3 times in the last 2 months. However, the attempt has still been a failure so far as domestic gold premium rose back to very risky levels in the past days, standing at VND4 million/tael or nearly 9% today.

Therefore, market participants expected the central banks to reopen account gold trading as regulated on the Ordinance on Foreign Exchange Control dated 13 December 2005 and related guiding documents.

Specifically, Decree No. 160/2006/ND-CP of the Government on regulations for implementation of ordinance on foreign exchange control defined “gold” as a type of foreign exchange, just like other foreign currencies, belonging to the foreign exchange reserves of the State, and in offshore accounts of residents.

On Sept. 28, the Central Bank held a meeting with Asia Commercial Joint-Stock Bank (ACB) and Vietnam Export Import Commercial Joint Stock Bank (Eximbank) to discuss the draft on the management of the gold market in the coming time. In the draft, the SBV suggested to allow 5-10 domestic firms and banks to open accounts on the international gold trading floors.

In case the SBV removes the ban on international gold trading accounts, the criteria to select qualified credit institutions will be developed later in detail.

Credit institutions were previously permitted to trade gold abroad. Decree No. 160/2006/ND-CP said licensed credit institutions are legal to trade currencies and gold on the international market. However, in mid-2010, the central bank banned such activity and requested all credit institutions shut down online gold trading by July 31, 2010.

Source Scarlet D. I Analyst I StoxPlus

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

Posted by VBN on Sep 30 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