Banking & Finance
Stronger dollar may push gold prices higher: experts
VNECONOMY updated: 10/09/2007
Local gold prices hit a one-year high yesterday, with experts predicting further gains due to global commodity trends and a stronger US dollar against the dong.
Bao Tin Minh Chau yesterday quoted the precious metal at VND13.42 million a tael, up VND120,000 over Thursday.
A tael is equivalent to 1.2 ounces.
"Many people are buying up gold on speculation that it may touch VND14 million soon," said Tran Huu Dang, who oversees trading at the Ha Noi-based company. Bao Tin Minh Chau sells about 400-500 taels a day.
In the world market, spot gold was trading at US$693.00 an ounce, just off the peak of $697.70 on Thursday – its highest since May 2006. In domestic terms, global prices are now equivalent to around VND13.6 million a tael, said Dang.
Local prices have not yet caught up with international levels but may eventually exceed spot gold due to heavy speculation in the domestic market as warehouses begin offloading their stockpiles, said Dang.
Another factor adding to speculation over surging gold prices is a strong US dollar, which makes importing the commodity more expensive in dong terms.
Vietcombank yesterday quoted the forex rate at VND16,240-16,246 per US dollar, up from around VND16,210 in mid-August.
The greenback has strengthened over the past three weeks due to exceptionally high demand for dollars among importers, said a State Bank of Viet Nam (SBV) official.
In response, the central bank has actively bought and sold the greenback in efforts to keep the exchange rate stable, said Nguyen Ngoc Bao, monetary policy director at the SBV, yesterday.
The SBV, though, maintains a controlled forex policy and has actively depreciated the dong against the greenback by about 1 per cent a year in order to encourage exports.
Pham Thanh Ha, head of foreign exchange at Vietcombank, yesterday indicated that the dollar often strengthens against the dong late in the year on a seasonal upswing in demand, which could put the central bank under greater pressure to stabilise the market.
"Banks are not short of US dollars yet," he said. "However, we are not in such a long position for dollars like we were at the beginning of the year."
Source: Vietnam News
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