State Bank authorises more gold imports as prices soar

The bank said on September 26 that gold price had dropped to its lowest level in weeks to just $1,532.45 per ounce on global markets – from a record high of $1,920 per ounce on September 6 – leading to dramatic fluctuations on the domestic market. The result has been a domestic gold price that has remained for weeks much higher than the world price.

On the same afternoon, after plummeting to VND43 million ($2,067.30) per tael, the domestic gold price quickly soared to VND45 million ($2,163.46) per tael – VND4 million ($192.3) per tael above the global price. (One tael is equivalent to 1.2 ounces).

At the same time, the exchange rate between the Vietnamese dong and the US dollar also spiked dramatically on the black market, rising to VND21,300 per dollar, even as interbank and official rates remained at VND20,628 and VND20,834, respectively.

The new gold imports, by increasing supply, were expected to help stabilise some of these fluctuations.

However, Nguyen Thanh Truc, general director of Agribank Gold Joint Stock Co, warned that gold traders would continue to be able to set their own prices without management from authorities, and some companies might continue to hold supplies back from the market, contributing to price manipulation.

By late on September 27, DOJI Gold and Germs Group was posting buy/sell prices of VND45.05 million - VND44.6 5 million per tael, while the world spot price on the London Bullion Market was $1,649.90 an ounce. The black market foreign exchange rate had also eased back to VND21,270 per dollar.

Eximbank general director Truong Van Phuoc said that it was necessary to import more gold to cool down the overheated domestic market, noting that domestic commercial banks were holding a significant quantity of US dollars, so the additional gold imports would not affect foreign currency reserves.

Meanwhile, Tran Thanh Hai, general director of the Vietnam Gold Business Co, suggested that the central bank issue gold certificates to sell to individuals at prices below the market price, discouraging citizens from buying and selling gold on the market and incurring risks, while helping the country retain its foreign currency reserves.

State Bank deputy governor Nguyen Dong Tien also revealed on September 27 that the central bank would submit its final draft of a decree on the gold market to the government for approval this week. Under the draft, the State Bank would control and intervene in the gold market if needed, preventing speculation and price manipulation. Trading in gold bars would also be restrained, Tien said.

Individuals and organisations who wanted to do business in gold jewelry or artworks would be required to establish enterprises and meet several stringent requirements, he added. Meanwhile, the central bank has warned investors to be wary of speculation and manipulation when trading in gold.