VietNamNet Bridge – The heavy fluctuations of the exchange rate
would badly affect the national payment balance. Experts say if Vietnam has to
choose one of the two – the gold price stabilization and exchange rate
stabilization – it would have to sacrifice the gold price in exchange for the
stabilized dong.
At 3 pm of November 7, the world
gold price reportedly stood at 1,725 dollars per ounce, or 43.40 million dong
per tael. Meanwhile, Vietnamese SJC brand gold reportedly climbed to 47.06
million dong per tael. The big gap of 3.7 million dong per tael between the domestic
and the world gold prices has been existing for a long time.
However, the State Bank of
Vietnam has affirmed that despite the big price gap, this has not had big
impacts on the dong/dollar exchange rate with the dollar price stabilized at
20,880 dong per dollar over the last few months.
According to Truong Van Phuoc,
General Director of Eximbank Vietnam, policy makers have to choose either the
gold price or the exchange rate stabilization, and one of the two needs to be
sacrificed for the other.
Phuoc believes that the State
Bank of Vietnam has done very well in stabilizing the exchange rate so far.
“If the exchange rate fluctuates
too heavily, this would have negative impacts on the national payment balance
and the trade balance,” Phuoc said. “It would be very good if the gold price
can be stabilized. However, if both the goals are unattainable, the central
bank needs to prioritize the stabilization of the exchange rate.”
Regarding the central bank’s
decision to choose SJC as the national gold brand, Phuoc said that the bank
does not mean to create the enterprise monopoly. In fact, SJC products have
been dominating the domestic market with 90-95 percent of market share.
The State Bank chooses SJC for
the national gold brand because it aims to control the gold stamping machine,
while striving to prevent the illegal gold import which once put a hard
pressure on the exchange rate.
Nevertheless, Phuoc has pointed
out that the central bank has not done well in explaining its policy to the
public. The information that SJC becomes the national gold brand has led to the
misunderstanding that non-SJC gold would be refused.
As a result, people rushed to
sell non-SJC gold to buy SJC brand bullion gold for hoarding, thus causing a
chaos on the market, while creating artificial SJC brand gold demand.
Director of a gold trade company
in HCM City has agreed that the State Bank has done well in stabilizing the
exchange rate.
In the past, the big gap between
the domestic and the world gold prices would prompt speculators to collect
dollars on the black market to import gold illegally for domestic sale for
profit.
However, the director said,
though the domestic price is much higher than the international price, the
illegal import and the dong depreciation have not occurred.
Nguyen Hoang Minh, Deputy
Director of the HCM City Branch of the State Bank of Vietnam, said in the
immediate time, the central bank does not intend to intervene in the gold price
by selling gold at low prices to force the prices down.
The State Bank has also vowed to
take necessary measures to fight against the so called “goldenization.” Banks
have been told not to accept gold deposits, while people would sell gold
instead of depositing to make profit.
US$1 = VND21,000
Compiled by C. V
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