SBV vows to continue gold bidding until short supply ends
SBV vows to continue gold bidding until short supply ends
Approximately 55 tons of gold has been put into circulation through bidding, which has helped narrow the gap between the domestic and the international prices. But the gold demand is still very high.
By noon August 17, the price gap had been narrowed to VND3.1 million per tael. If counting on expenses, the gap would be VND2.6 million per tael.
As such, the great effort by the State Bank of launching gold to the market to increase the supply has been repaid. The price gap, which once hit the peak of 20 percent, has dropped to 7 percent.
Deputy Governor of the State Bank of Vietnam Le Minh Hung, when asked what the central bank would do after selling 55 tons of gold and succeeding in narrowing the price gap, said the State Bank will continue organizing bids to increase the supply if there is still demand in the market.
Vietnam is not a gold producer. It needs to import gold to satisfy the demand. Meanwhile, under the Decree No. 24, the State Bank is the only agency which has the right to import and make bullion gold, which means it is the only supplier to the market.
As the State Bank bears the task of stabilizing the market, it would have to continue organizing bids to balance the supply – demand, because the short supply may cause immeasurable consequences.
Regarding the market demand, the newly released report of the World Gold Council showed that the demand in Vietnam was 77.4 tons last year. The noteworthy thing is that there has been no new supply for the market since it stopped importing gold in 2011.
If so, analysts said, the 55 tons of gold the State Bank has marketed through bidding is still not enough.
Meanwhile, according to the owner of a private gold company, about 5,000-7,000 taels of gold is traded in the market every day. The State Bank organizes two bids a week and puts 26,000 taels on sale each trading session, which is believed to be “reasonable.”
The businessman revealed that he has been requested by some commercial banks, which joined the State Bank’s bids, to sell gold for them. The banks could not sell all the gold they bought in the market. He said the demand has been gradually satisfied through the bidding, while people prefer buying gold from shops to banks.
Hung from the State Bank of Vietnam said what the bank focuses is not lie in the fact how much longer it would sell gold through bidding, but how to keep the market stabilized and minimize the negative impacts on the macroeconomic stability. Organizing bids is one of the solutions to that ends.
Analysts have also commented that in order to obtain the goals, $2.5 billion would be a reasonable cost. Meanwhile, the State Bank will not lose the $2.5 billion. It may even make profit of trillions of dong from the price changes, the profit which was once pocketed by importers.
vietnamnet
