Tuesday , July 16 2024

Central bank ready to increase gold bullion supply

The State Bank of Vietnam is ready to increase gold supply to stabilize the market, the head of its foreign currency department has said.

“We are ready to intervene to stabilize the market with an increase in the supply of Saigon Jewelry Company (SJC) gold bars,” Dao Xuan Tan said.

He was speaking about bullion prices fluctuating in recent days around its new historic peak of VND80.3 million (US$3,308.6) per tael if 37.5 gm.

He said the surge in global prices has affected investors’ sentiment in Vietnam too, and prices would therefore rise due to higher demand.

But people are not rushing to buy gold unlike in previous years, and some are even selling, he said.

Vietnam in 2012 issued a decree to prevent “goldization,” a term used in the country to describe the preference for keeping and using gold as a currency due to fear of currency depreciation.

The decree gave SBV a monopoly on gold production and it has signed up Saigon Jewelry Company to make bullion for it. Domestic gold prices, therefore, are different from the global rates and are now around 30% higher.

But in the last decade the central bank has not released new gold in the market, and bullion supply has only declined following exports.

Gold sellers have for years been seeking permission to produce bullion in vain.

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