A reporter from the State Bank of Vietnam website interviewed Mr Nguyen Ngoc Canh, Director General of the Foreign Exchange Management Department in regard to the issue.
Q: Over the past days, the differentiation between domestic and global gold prices has widened. Could you please tell us what the cause of the movement is?
A: Close monitoring of the domestic and foreign markets shows that from the end of November up to now, the differentiation between the domestic and global gold prices was increasing, up to VND 4.4 million/tael at some points of time. However, the differentiation between the domestic material gold price and international prices in the equivalent, without charges and fees, were mostly below VND 1 million/tael. Meanwhile, the gold market was stable, the daily trading volume was low, and it decreased approximately by 20% as compared with the same period in 2015. There was no evidence of “gold fever” with people queuing to buy gold as in previous years.
The cause of increasing the price differentiation of an SJC bar-gold in the domestic market and international markets in recent days was the decrease in the international gold price following the increase of USD value as compared to the other key foreign currencies, the US Treasury yield increased sharply, and investors are optimistic about the financial market's prospects and the expectation of an FED rate hike at the end of the year.
Mr Nguyen Ngoc Canh, Director General of the Foreign Exchange Management Department
Meanwhile, in the domestic market, many enterprises and people had bought gold at a relatively high price which they still want to keep. Therefore, although the domestic gold price dropped in line with the international gold price movement, it changed at a slower rate and more narrowly, from VND 37 million per tael to VND 36.62 million per tael (a decrease of around VND 380,000 per tael).
Q: Could you please tell us how the SBV’s will manage the gold market in the future?
A: The facts show the positive effects of the implementation of measures to manage the gold market in line with Decree No. 24/2012/NĐ-CP. The gold market has been stabilized and the purchasing of gold bullion has been decreasing. Following the Government’s directions, the SBV is now reviewing the implementation of Decree No. 24/2012/NĐ-CP to revise a number of items in accordance with the new context. Accordingly, the SBV continues to closely manage the gold bullion market to facilitate the development of the gold jewellery market and ensure the legitimate rights of individuals and enterprises.
Q: Developments in the gold price and the rumours regarding changes to the value of the Dong can affect the public psychology when trading foreign currencies and gold. Can you comment on this activity?
A: Regarding rumours concerning the movements of the Dong, the SBV denied the rumour at the regular Government meeting on November 29. Therefore, in the near future, local people and traders need to be cautious about their decisions in order to avoid risks and losses.
The SBV has been closely monitoring the macro-economic and monetary situation in the domestic and international markets, and are prepared to intervene to stabilize forex and the gold markets. Moreover, to ensure strict compliance with and the implementation of regulations around foreign exchange, the SBV requires it's municipal and provincial branches to strengthen the inspection and supervision of forex operations in their locations, and to continue coordinating with the relevant ministries and agencies to recognize and deal strictly with any violations related to forex and gold trading.
Thoa Le – Le Hang