The central bank has chosen to play safe, selling gold from the reserve and importing this yellow metal from international markets.
There have emerged many suggestions for solving these financial issues, such as a proposal that SBV should not sell gold from the nation’s foreign reserves and should allow gold imports to stabilize the market. But in the past, a gold import rumor always triggered an exchange rate fluctuation, prompting people to hold on to foreign currency.
To deal with the problem, the central bank has many times applied exchange clearing policy, forcing enterprises that have foreign currency to immediately sell part or whole of it to local banks, the leader explained.
The central bank has imported and sold out over 15 tons of gold. However, there is no exchange rate tension as it has used foreign currency in the foreign reserves to buy gold.
Up to now, SBV has spent US$600-700 million on gold imports, not up to billions of U.S. dollars as estimated by certain experts. In previous years, it took the nation several billions of dollars to import gold and as enterprises only bought gold from the market, the exchange rate became volatile at once.
Vietnam every year needs around 50 tons of gold to produce bars and jewelries while the precious metal has also been smuggled into the country. Therefore, supplying gold for the market cannot be avoided.
Besides, the central bank has spent much smaller foreign currency amounts on gold imports than in previous years. This volume makes up a small fraction in that bought by the central bank in recent times to raise the nation’s foreign reserves, which are the highest ever.
The central bank’s determination to eliminate gold mobilization and lending operations of banks has prevented gold-associated risks and helped reduce the use of gold in the economy. Over the past one year, local banks have bought over 100 tons of gold from the domestic market to pay for gold depositors without using foreign currency to import gold.
The leader said that that selling gold in foreign reserves might cause a small loss but gains could be bigger, such as a stable exchange rate, a reduced holding of foreign currency in the population and little impact on foreign reserves.
The central bank sold 19,600 out o 26,000 gold taels put up for sale at the 15th bidding on Thursday. There were nine winning bidders with the winning prices ranging from VND41.52 million to VND41.56 million a tael.