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Vietnam central bank admits intervening in gold market to support its currency

Section: Daily Dispatches

Only in a nominally communist country does a central bank tell the truth.

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Vietnam Central Bank Vows to Intervene in Gold Market to Maintain Stability

From Tuoi Tre (newspaper)
Ho Chi Minh City, Vietnam
Monday, May 26, 2014

The State Bank of Vietnam has enough gold bullion that can be sold on a large scale to intervene in the local gold market to ensure its stability, said a senior official of the Vietnam's central bank.

If there are more fluctuations in the gold market, the central bank will jump in to stabilize it, said SBV Deputy Governor Dao Minh Tu in a press release on Sunday afternoon.

Though the gold prices in domestic market have fluctuated over the past few days, through monitoring and analyzing market information, the bank has not found any evidence that those changes in price may have been caused by the fluctuations in the world market or the gold supply and demand in the market, Tu said.

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Thus the central bank can confirm that those fluctuations in the gold price on the domestic market are mainly due to psychological factors, he said.

Someone has taken advantage of the tension in the East Vietnam Sea to speculate on gold bullion and cause the price hike, making a psychological impact on local buyers.

As a result, the State Bank of Vietnam warns local people to be cautious when deciding to buy or sell gold bullion to avoid unnecessary losses, Tu added.

This is the first time in 2014 when the bank said it will likely resume its gold auction activity, an activity that was stopped with the last auction held on December 28, 2013.

Previously, the local financial market operator had twice sent the same messages confirming the stability of the local market.

Most recently, on May 20, the State Bank of Vietnam also warned people to be cautious before buying or selling gold to avoid unnecessary losses due to psychological factors or being agitated by bad people.

Last week the domestic price of gold bullion refined by Saigon Jewelry Co., Vietnam's biggest gold trader and refiner, continued to rise by VND300,000 a tael to VND36.85 million per tael, which equals 37.5 grams.

Given the official foreign exchange rates, import taxes, and other fees levied on gold bullion trading activity, domestic price was some VND4 million a tael higher than the world price.

Since early 2014 the domestic gold market has been quite stable with the difference in the world and local gold price pretty much narrowed down to about VND1 million a tael.

The stability in the gold market is said to be maintained due to the State Bank of Vietnam's gold auctions, which supplied more gold to authorized local banks and traders starting in 2013.

The central bank has launched 76 auctions since the first auction on March 28, 2013.

In the 76 auctions, the highest bidding price was recorded in the first, at VND43.81 million a tael, while the lowest price was in the last, at VND34.65 million per tael.

Through bidding, the State Bank of Vietnam has sold a total of 1.82 million taels of gold billion, equivalent to 69.9 tons.

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