The central bank prefers to keep the dong stable but it depends on the structure and efficiency of the economy, State Bank of Vietnam governor Nguyen Van Giau told legislators at the National Assembly's question and answer session November 17. He was replying to a question by Le Thi Nga of Thai Nguyen Province on the central bank's role in the depreciation of the currency. He added that the bank wants to maintain a loose monetary policy but in a cautious manner. Pham Thi Loan of Hanoi said many businesses faced difficulty in buying US dollars and the exchange rate on the free market is VND300-400 higher than the official rate. She asked: "Is it true that the official exchange rate is not practical?"Mr Giau said: "Since 2007 the foreign exchange market has seen complicated developments. Many have called for devaluing the dong, but I think it is dangerous since the national debt is too high - businesses' debt alone amount to US$17 billion. State Bank governor Nguyen Van Giau … [Read more...] about Central bank prefers stable dong, chief tells legislators
Why central banks buy gold
VietNamNet Bridge - Some 15 tons of gold has been sold by the State Bank of Vietnam through bidding. It is estimated that VND15 trillion has been taken back from the gold sale. In late 2012 and early 2013, the central bank bought foreign currencies continuously. The net purchase of $5 billion was made just within a short period. The central bank reportedly bought $3.18 billion in the first quarter of 2013 after balancing the purchase and sale, for which VND66 trillion was put into circulation. The moves of the State Bank partially explained why the total money supply M2 keeps increasing steadily. By April 29, the M2 had increased by 4.8 percent in comparison with the end of 2012. Since a big amount of dong has been put into circulation to buy foreign currencies, the State Bank now needs to call dong back to ease the influences of the dong supply increase and ease the pressure on the inflation. There are several instruments for the State Bank to use to obtain that goal. In the … [Read more...] about Gold serves as a tool for central bank to regulate capital supply
The State Bank of Vietnam (SBV) is postponing gold auctions in the light of the large gap between domestic and global prices of the precious metal. "The price gap is large but the demand for gold bullion is almost zero. The SBV has no plan yet," Nguyen Ngoc Canh, the newly-appointed head of the Foreign Exchange Management Department, told Vnexpress. The SBV is the only provider of gold bullion to the domestic market. The Sai Gon Jewellery Company (SJC) on September 24 afternoon posted prices of 35.89 million VND to 36.01 million VND (1,684 USD to 1,690 USD) per tael for gold on its website. At the same time, the spot price for gold on Kitco.com was 1,221.70 USD, down from 1,222.90 USD on September 24. In an attempt to fan market interest last year, the SBV held 76 auctions and sold a total of 1.82 million taels of gold. However, they have held off on gold auctions since the beginning of this year. On September 22, and for the first time since June, the SJC quoted a price that … [Read more...] about Central Bank postpones gold auctions
VietNamNet Bridge - The gold put by the State Bank into auctions has been sold out, which shows the high demand for gold. People tend to hoard more gold when other investment channels get stuck. Analysts previously all thought that after June 30, 2013, when commercial banks were forced to stop mobilizing and lending in gold, the demand for gold would decrease sharply, which would help narrow the gap between the domestic and the world prices. However, contrary to all predictions, the demand for gold remains high, while the State Bank's gold bids still enjoy large custom. Where has the gold gone? A report of the State Bank showed that it has put 57 tons of gold into auctions so far this year. Of this amount, 30 tons have been sold to commercial banks, while the remaining has been sold on the market. Since June 30, the gap between the bidding prices and the market prices has been narrow, not higher than VND340,000 per tael. The bidding prices of some buyers were just VND150,000 per … [Read more...] about Having idle money, people buy gold from SBV to defend themselves
While banks are banned from mobilising and lending gold, or in other words, gold business has no way-out, why are they competing with each other fiercely and using higher interest rates as an advantage to attract the precious metal? Most of the time, interest rate race is ignited by small banks. When interest rates on dong deposits are put an upper limit, banks have started the race of gold certificates. In the past month, gold interest rates have risen continuously, from less than 1 percent per annum to 3 percent for short-term deposits. Gold rush Since early October, banks simultaneously pushed up interest rates on gold deposits. Saigon Commercial Joint Stock Bank (SCB) lifted its gold deposit rate to 1.8 percent per annum for one-month term, 2.2 percent for two-month period, and 2.5 percent for six- or nine-month term. Viet A Bank and Housing Development Bank (HDBank) also offered 2 - 2.2 percent rates on short-term gold deposit certificates. Many banks continued to apply higher … [Read more...] about Does Gold Boost Bank Liquidity?