Vietnam to import gold to cool down local gold fever

21 August 2011 | 03:47 Code : 20745 Geoscience events
Announcement by the State Bank of Vietnam (SBV) to permit companies to import five....

Announcement by the State Bank of Vietnam (SBV) to permit companies to import five tons of gold bullion helped cooling down the gold high fever that has been spreading throughout the country, especially in Hanoi and Ho Chi Minh City since the beginning of the week.Major gold dealers reported on Thursday that they obtained their import quotas and expected the imported gold would arrive in Vietnam on Friday.Vietnam’s gold market got mad in the last three days, and would continue in a high fever in the coming days, insiders forecast on Thursday when receiving news of the world’s gold price soaring to a new record of over 1,800 U.S. dollars per ounce, which surpassed Goldman Sachs’ forecast on Tuesday at 1,730 U.S. dollars per ounce in the coming six months.The SBV said on Tuesday that it plans to allow companies to import five additional tons of gold bullion “in coming days”.That positive news helped reduce the domestic gold price from the record high of 46.3 million Vietnamese dong (VND) (2,237 U.S. dollars) per tael on Tuesday down to 43.9 million VND (2,115 U.S. dollars) on Wednesday.Local economists said that the main reason for gold price surge in Vietnam is the S&P’s downgrade of U.S. credit, together with slowing economic data.Normally, the domestic gold prices often increased along with the global trend, and always at a lower level. But since August 3, gold prices in Vietnam have been skyrocketing, and when reaching over 41 million VND (1,994 U.S. dollars) per tael, they posted a higher increase than the global price, ranging from 200,000 VND ( roughly 10 U.S. dollars) to up 2 million VND (100 U.S. dollars) on Tuesday.Explaining the quick turnover, Vu Minh Chau, general director of Bao Tin Minh Chau (a credited gold trading company in Hanoi) said that in June and July, a number of major companies and financial groups had purchased gold bullion in great quantity to export to foreign countries at a profit, resulting in an imbalance in supply and demand on the domestic market.The current domestic gold price is an illusion, as it is much higher than global prices, Chau said.Vietnam’s gold consumption increased by two percent, reaching 19.2 tons during the first quarter of 2011; demand for gold was valued at 878 million U.S. dollars, up 28 percent year-on-year, according to a World Gold Council report.Along with the urgent move on gold imports, the SBV reconfirmed that it would formulate policies to stabilize the Vietnamese dong by ensuring investors earn a greater profit from holding VND rather than U.S. dollars or gold bullion.However, following soaring gold prices, the U.S. dollars cost more to buy at Vietnamese commercial banks, reaching around 20,750- 20,810 VND on Wednesday, up 70-100 VND against the previous day. Meanwhile, black market dealers traded the dollar at 21,000-21,300 VND, saying there was a sudden demand for the greenback and partly due to SBV’s announcement of gold imports.The SBV on Wednesday began to lift the exchange rate between VND and USD, from 20,608 VND for one U.S. dollar to 20,618 VND. – Xinhua

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