Light gold market Vietnam

- Representative of the International Monetary Fund (IMF) in Vietnam, Mr. Sanjay Kalra gave his assessment of the implementation of measures to manage the Government's gold market over time.From the quarter 4/2008, "the rush safe haven" in the context of the global financial crisis has contributed to the increased world price of gold. Simultaneously, the level of world price fluctuations and increase.

World price increases and higher volatility of the world market has been transmitted to the gold market in Vietnam. Next, the higher volatility of the gold market in the country is transmitted to the foreign exchange market due to the relationship between the property market because gold is the role of monetary assets in the economy of Vietnam.

The fluctuation of foreign exchange and gold has put balance sheets of banks in Vietnam risk status through several channels, including credit risk and liquidity. In addition, the balance sheet of the bank were also imbalances and currency futures. At the same time, the large gold imports has reduced international reserves in 2009. In the context of the global financial market stability, global gold prices finally began descending into quarter 3/2012.

During the period 2011-2013, the Government of Vietnam has launched several measures related to the gold market. These measures began in January 4/2011 by the end of the gold lending credit institution. 4/2012, the government issued a decree on the management of gold trading activities. The content of this Decree, including the restriction and authorization to import gold material gold production for the State Bank of Vietnam. The government also requires banks to settle all deposit their gold. SB started bidding on gold bars from 3/28 to reduce the imbalance between supply and demand.

The measures implemented by the Government of Vietnam is driven by a number of factors in order to improve the performance of the market. The first is to strengthen financial stability by reducing the risk of bank related assets and liabilities on the balance sheet of gold his property.

Second, reduce the level of volatility in the foreign exchange market and gold and thereby improve the effectiveness of monetary policy.

Third, ultimately reducing the difference between the domestic price and the world.

Fourth, in the long run, the market expects gold and foreign exchange stability, and macroeconomic stability in general will contribute to reduce the level of gold holdings, improving the current account balance and convert from gold to the property "for production".

Differences domestic price and the world has increased after 2012. The difference now may partly reflect the fact that banks will have to complete the process of debt obligations with its gold, this is additional demand on the market compared to the previous period. However, the level of volatility in the domestic and world prices (measured by the coefficient of variation) decreased during this period.