Central bank required to take urgent measures to stabilise gold market

Customers shop at a jewellery store in Hanoi (Photo: VNA)

The Government has directed the State Bank of Vietnam (SBV) to urgently inspect and supervise to stabilise the gold market.

Under a document issued early this week, Deputy Prime Minister Le Minh Khai requested SBV Governor Nguyen Thi Hong to coordinate with relevant agencies to urgently and effectively implement tasks and solutions to manage and stabilise the gold market.

The Deputy PM also assigned the SBV to coordinate closely with relevant agencies to urgently carry out close and comprehensive inspection and supervision of the gold market. The supervision and inspection must be carried out with gold trading enterprises, stores and distribution agents.

The Government’s move is to ensure the stability and safety of the gold market, and contribute to limiting the “goldenisation” of the economy, besides ensuring national financial and monetary security, and developing a safe, healthy, effective and sustainable gold market.

The Prime Minister requires a report on the results of handling these tasks in March 2024.

In fact, the Government has repeatedly requested the SBV to take measures to manage the gold market to prevent gold bar prices from being too high compared to the world since the end of last year.

The Prime Minister has recently requested the SBV to urgently re-assess Decree 24/2012/ND-CP, which governs the management of gold import and export activities by the SBV, to determine its effectiveness and propose necessary changes to adapt to the current state of the gold market. The amendment is aimed to align supply and demand and consider alternative approaches to gold market management.

Under Decree 24/2012/ND-CP, the SBV has a monopoly on gold production and import, while Saigon Jewelry Company (SJC) was the sole maker of SJC-branded bullion.

According to experts, together with the general Vietnamese preference of keeping gold as a means of reserve to hedge against inflation and risks, the monopolies cause imbalance in supply and demand in the gold market, causing domestic gold prices to differ widely from world prices. At some points, the price gap was up to 20 million VND a tael, which was unreasonable.

With huge gaps in domestic and world gold prices, smuggling for profit increases, which makes it difficult to manage the gold market, causes loss to the State budget and poses risks to foreign exchange rates. Speculation and manipulation are also distorting the domestic gold market.

They therefore propose it is time to amend the decree and hope that the gold market will experience greater liberalisation in the future. Any new regulations permitting gold imports will help narrow the gap between domestic and international gold price, safeguarding the rights of investors./.