Vietnam to Allow Gold Imports to Prevent Speculation
Source: Bloomberg, Nguyen Kieu Giang (11/11/09)
"Five or six companies will be allowed to bring in unlimited amounts of gold."
Importers will be permitted to buy the metal to stop prices from rising excessively, the central bank said. Five or six companies will be allowed to bring in unlimited amounts of gold, online news service VnExpress reported, citing Governor Nguyen Van Giau.
In Vietnam, concern that the government may be forced to devalue the dong has pushed up domestic gold prices.
"Taking advantage of unstable international gold prices and peoples' concern that prices will rise further, local speculators have pushed prices to a very high level," the statement said. The resumption of imports is aimed at "stabilizing the market, and preventing speculation."
Dong forwards dropped to the weakest in more than 16 months and the spot rate reached a record-low on speculation investors stepped up purchases of dollars to buy gold.
One-year non-deliverable forwards for the dong fell 6.4% to 21,555 per dollar, and earlier slumped to 22,900, the lowest level since June 25, 2008. Forwards are agreements in which assets are bought and sold at current prices for delivery at a future specified time and date.
The price of gold in Vietnam was 27.5 million dong ($1,539) per tael today, according to Vietnam Posts & Telecommunications. It earlier reached a record high of more than 29 million per tael. One tael is about 1.2 oz of gold.
"That made supply scarcer, which then pushed prices up," Dinh Nho Bang, vice chairman of the Vietnam Gold Traders' Association, said. "Local gold demand has increased dramatically recently when international prices jumped."
Vietnam's central bank also warned people "to be cautious in making decisions on buying gold in the context of complex fluctuations in international gold prices."