Experts lobby for gold market loosening

In the last seven months the State Bank (SBV) sold 65 tonnes of gold, valued at $3 billion, through 68 bidding sessions.

Experts said the move helped stabilise the gold market and exchange rate and that it can now look to relax its grip on the market and focus more on management.

Director of the Business Development Institute Le Xuan Nghia said the central bank’s monopoly on gold imports was vital in replenishing foreign currency reserves.

Now that the market is stable, the SBV can again allow firms to take over the import/export of gold and concentrate on management activities.

“If the SBV continues to be directly involved in gold import and bidding it would face unnecessary risks. Once firms are again in charge of trade the price gap between the domestic and global market will narrow, reducing speculation and improving market stability,” Nghia said.

In support of the idea, economist Tran Du Lich said, “Let the market do its job. The SBV should not have a monopoly on gold imports and bar production. This comes dangerously close to gold acting as the country’s currency, and that could be perilous and needs careful consideration.”

Regarding new measures on gold management, Nghia suggested forming a national gold exchange to facilitate bigger transactions and tighten regulation and management.

“In my view, the SBV should fill a management and supervisory role and assign several banks to take a decisive role in forming the gold exchange,” Nghia suggested.

Agribank Gold general director Nguyen Thanh Truc said a gold exchange would elevate Vietnam to a global standard and even noted several less developed countries that have already established systems.

Lich suggested using gold as a kind of foreign currency.

“People can hoard foreign currencies but are not allowed to use them as a means of payment. The same should be true of gold. Gold is not an item used in consumption and will lose charm once the dong appreciates,” Lich explained.

Responding to media enquiries, SBV Deputy Governor Dao Minh Tu said the central bank’s gold bidding sessions over the last several months have helped stabilise the market and now is not the time to loosen control of the bullion market.

“The SBV is carefully reviewing the bullion market before setting any new regulations. In the near term to early 2014 there would not be major changes to management of the gold market,” said an SBV source.