Experts said that it may be impossible to force people to keep Vietnam dong instead of gold, unless the value of the dong increases.
Vietnamese store around 500 tonnes of gold
This issue was addressed at a seminar held by the Vietnam Banking Association and Vietnam Bank for Industry and Trade (Vietinbank) in Hanoi on March 15.
Dr. Do Thi Thuy, member of Vietinbank’s Board of Directors, said that due attention should be paid to the close relationship between gold prices, the foreign currency exchange rate and inflation.
She noted that the recent rush to buy gold was a result of high inflation. In order to stabilise the gold market, the first thing that must be done is to curb inflation. This would increase confidence in the Vietnam dong as well as reduce currency and gold speculation, she added.
Experts agreed that reasonable and consistent policies should be made to effectively regulate the gold market.
There have been suggestions to set up a national gold trading floor which would operate under the government’s management.
“It’s high time to work out a sensible approach to the regulation of the gold market. Setting up a national gold trading floor is an optimal choice,” said Dr. Vu Dinh Anh, from Academy of Finance’s Institute of Economics and Finance.
Tran Trong Khanh, general director of Saigon Gold and Silver ACB-SJC Joint Stock Company (ACB-SJC) agreed, saying, “Such a gold trading floor should be considered a part of the exchange market, and be traded like other commodities.The State Bank of Vietnam (SBV) should organise training courses on gold trading and grant trading licences.”
There should also be specific policies drawn up in order to facilitate gold mining and production, Khanh said. He noted that such move would help boost the domestic supply and gradually reduce dependence on gold imports.
“Vietnamese people are currently storing up around 500 tonnes of gold. The country imports 60 tonnes of gold every year, while only between one and two tonnes are produced from domestic gold mines,” Khanh added.
According to Khanh, the government’s Decree No. 11 on ending unofficial gold market is aimed at restricting gold bar trading to commercial banks. This means that people’s habit of trading in gold bars will be maintained but in a new manner.
According to Nguyen Quang Huy, head of SBV’s Foreign Currency Management Department, owning gold bars is a legitimate right of Vietnamese citizens, despite the government’s crackdown on the unofficial gold trading.