Vietnam's Prime Minister Pham Minh Chinh has requested the State Bank of Vietnam (SBV) to take solutions to regulate domestic gold prices in line with market rules, not letting them go too far from world prices.
The price of gold bullions in Vietnam had skyrocketed over the past weeks, peaking at VND80 million ($3,292) per tael on Tuesday, the highest level so far. The difference between domestic and world gold prices has continuously expanded in recent days, reaching nearly VND20 million ($824) per tael at certain moments.
In a Wednesday dispatch to the central bank and relevant ministries, the PM said soaring local gold prices in the past few weeks have had a negative impact on the financial and monetary markets as well as market sentiment.
“The SBV must come up with healthy, effective solutions to stabilize the market and report the results to the government in January 2024," the dispatch said.
The PM also asked the central bank to closely monitor world and domestic developments, develop scenarios and plans to respond to world and domestic developments in order to stabilize the market.
"We should definitely prevent the "goldenization" of the economy, which will have a negative impact on exchange rates, interest rates, monetary market, foreign exchange rate as well as… monetary safety and security," he said.
He said the SBV must strengthen inspection, examination and supervision of the gold market and activities of gold trading enterprises as well as distribution stores and agents; strictly handle violations by organizations and individuals, especially smuggling, profiteering, speculation, manipulation and taking advantage of policies to push up prices.
When violations are detected, concerned documents must be transferred to relevant authorities for strict punishment, he stressed.
The central bank should review policies and evaluate the domestic gold market, including production and trading of gold bars, SJC-branded gold and gold jewelry, laying the foundation for proposing solutions in the future, the PM stated.
The sharp increase in domestic gold prices has been attributed to falling deposit interest rates and increasing year-end demand for storage and investment. However, some experts have blamed the gold monopoly policy for causing a supply shortage, overheating the domestic gold market and widening the gap with world prices.
The fact that SJC is a national gold brand with monopoly on gold bullion trading leads to an uneven playing ground for businesses in the industry, they said.
In response to the PM's request, the price of SJC-branded gold bullions in Vietnam on Thursday afternoon plummeted by nearly VND3 million ($123.6) to VND74 million for buying and VND77 million for selling per tael, marking the sharpest daily reduction so far.