SBV to buy ‘idle' gold bars for forex reserve
The State Bank of Vietnam (SBV) will buy gold bars lying idle with domestic individuals and organisations to increase Vietnam's foreign exchange reserves as and when conditions permit.
In a report sent to the National Assembly recently, SBV governor Nguyen Van Binh said the local gold market has remained stable for the past few years, although Vietnam has been a gold importer and has the habit of holding gold.
The central bank has not used the national foreign exchange reserves to stabilise the gold market since early 2014, while before 2011, the gold market used to be volatile, putting pressure on the currency market, account balances, monetary policies, and economic growth, Binh noted.
Binh suggested that one of the key premises is to take long-term measures to mobilise domestic gold sources for socio-economic development.
The country's tendency to use gold as a payment means has been curbed and a part of the idle gold kept by individuals and organisations has been used in the production sector, he added.
To manage the gold market better, Binh said, the central bank will continue taking comprehensive measures to ensure that the gold market remains stable. It will also capitalise on the idle gold source of the domestic market for economic development.
The central bank has so far issued licences to 38 credit institutions to set up 2,500 gold shops at 63 provinces and cities nationwide.
According to the World Gold Council (WGC)'s report released last week on the global gold demand trend during the first quarter, Vietnam consumed 18.3 tonnes of gold in Q1, down 7% year-on-year.
Viet Nam's bar and coin demand totalled 14.2 tonnes, down 12% year-on-year, while jewellery demand was at 4.1 tonnes, up 10% year-on-year.
According to the WGC's report, global consumer demand in Q1 reached 853.8 tonnes, down 5% year-on-year. Jewellery demand reached 600.8 tonnes, down 3% year-on-year, while bar and coin demand was at 253.1 tonnes, down 10% year-on-year.
Mainland China (excluding Hong Kong and Taiwan) continued to lead the world with its consumer demand reaching 272.9 tonnes, including 213.2 tonnes in jewellery and 59.7 tonnes in bars and coins. India followed with a consumer demand of 191.7 tonnes, including 150.8 tonnes in jewellery and 40.9 tonnes in bars and coins.
In Q1, central banks and other official institutions continued their buying momentum with net purchases totalling 119.4 tonnes (virtually unchanged compared to the same period in 2014). This is the 17th consecutive quarter of their net purchases.