The State Bank of Vietnam has declared its cessation of gold auctions in a bid to address the fluctuating bullion supply, opting instead for alternative measures to maintain market stability. This decision, announced late Monday, marks a significant shift in strategy for the central bank.
Previously, the bank had utilized auctions as a means to bolster the availability of bullion in the market. However, the specifics of the alternative measures to be implemented were not disclosed in the announcement.
Vietnam has witnessed notable fluctuations in bullion prices, with rates soaring to VND92.4 million ($3,630.29) per tael earlier this month before experiencing a decline. Notably, this figure stood at a staggering 23% above the global market rate. It’s a trend consistent with Vietnam’s historical trend of domestic prices surpassing international benchmarks.
Since the beginning of the year, the central bank has conducted six auctions, offloading a total of 48,000 taels, each weighing 37.5 grams or 1.2 ounces, to designated businesses. The objective was to augment supply and temper escalating prices. However, the efficacy of these auctions in stabilizing the market has come under scrutiny.
Tran Van Lam, a member of the National Assembly’s Finance and Budget Committee, critiqued the high reserve prices set by the central bank during these auctions. According to Lam, this practice has inadvertently facilitated profit-seeking behavior among buyers, contributing to sustained market price levels.
Amidst these deliberations, voices advocating for the central bank to relinquish its monopoly on gold manufacturing have emerged. Analysts argue that such a move may offer a more sustainable solution to the challenges posed by the bullion market.
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