By Le Phuong
HANOI, Feb. 28 (Xinhua) -- The State Bank of Vietnam (SBV) will intervene in the local gold market to curb the rising disparity between local and global gold prices, SBV deputy governor Le Minh Hung told local media on Tuesday.
His statement was made after gold prices in Vietnam were traded much lower compared to the prices in the world market.
Specifically, on Tuesday while global gold prices were increasing, those in Vietnam sharply decreased compared to the previous trading day. Insiders warned that domestic gold prices do not follow the world trend.
To handle the situation, the SBV and Saigon Jewellry Company ( SJC) signed a principle contract on Tuesday, under which the SJC will use SBV's gold reserves to make national SJC-brand gold bars so as the SBV can trade them on the market.
Doing this, the SBV could regulate local gold trading with prices following the global trend, said the central bank official.
During the last two years, the SBV did not allow gold imports to limit trade deficit and curb inflation, which lead to shortage of raw gold for the production of SJC-brand gold bars.
"Now that the central bank is getting involved in gold production by importing gold when necessary, I believe that domestic gold prices will soon follow the global prices," said Le Hung Dung, CEO of SJC.
The central bank allowed some major banks to temporarily export non-SJC gold, then import gold for production of the SJC-brand gold bars in Vietnam.
As of Feb. 26, the Dong A Bank reported it was allowed to temporarily export-then import 600 kg of gold and it will do with another 500 kg on Feb. 28.
Meanwhile, the Techcombank will be allowed to import 500 kg of gold soon, reported Tuoi Tre newspaper on Wednesday.
Nguyen Quang Huy, head of SBV's foreign currencies management department, attributed the large disparity between local and global gold prices to the fast decreasing price in the world gold market, while gold prices in Vietnam are being adjusted slowly.
The SBV is preparing all necessary steps so as it can join the local gold trading soon, Huy told Tuoi Tre newspaper, adding that SBV will work as a gold trader, selling gold through a bidding form to other clients who join the market, with the aim of making domestic gold prices keeping en march to the global ones.
The SBV plans to hold the first bidding session this week, along with changing nine tons of non-SJC gold into SJC-brand gold, which will provide an abundant amount to the market, Huy told local media.
On Tuesday, SJC-brand gold prices were traded at 44.7 million VND (2,143 U.S. dollars) per tael (1 tael equals to 1.2 ounces), while the global gold prices hit nearly 1,600 U.S. dollars per ounce.