Opinions differ over gold import

Nguyen Thanh Long, chairman of the Vietnam Gold Business Association, said a long-term vision is necessary for management of the gold market, and now the deadline for gold lending and mobilization should be extended to reduce the pressure on the market.

Another solution that should be considered is the central bank directly imports gold and help resolve the gold liquidity problem of commercial banks. This should be a last chance for banks to settle the issues relating to gold, said Long.

Sharing this view, economist Pham Do Chi said the central bank should import gold to deal with the gold liquidity problem at a couple of banks. Commercial banks can mobilize foreign currency on their own, so the foreign currency status of the Government will not be affected, said Chi.

He suggested considering connecting gold import and export markets in the future. Once there is no barrier between the local market and the world market, there will be no gap between local and global gold prices.

Meanwhile, another source showed concerns over forex fluctuations if gold is to be imported.

The source, who asked not to be named, cited the past practice, saying that when the difference between local and global gold prices widened, the central bank often enabled gold import to stabilize the market. As information about gold import was released, foreign currency prices usually picked up due to speculation.

The situation is the same this year. If the central bank announces the volume of gold to be imported, then foreign currency prices will fluctuate, said the source.

“The forex market will already turn volatile with import of $50 million worth of gold, whereas we need some US$1 billion to import a sufficient volume now,” said the source. Therefore, he said gold import should be the final option only.

“We imported a not-so-small amount of gold every year in the past, foreign currency was spent, but gold supply was always not enough to meet the demand. Then, how much is enough?”

Instead, the central bank should consider extending the deadline for gold lending and mobilization at a number of banks currently facing liquidity shortage, said the source. In particular, the central bank should set a specific new deadline for each bank and closely supervise their operations.

The source said the gold liquidity problem could be resolved in one-year time. Therefore, it is not necessary to import gold to avoid affecting the foreign currency status of the country.