SBV says gold will remain on trade balance

Central bank Governor Nguyen Van Giau has brushed aside a suggestion by the gold trader association to take gold out of the trade balance, saying the precious metal remained a commodity despite its currency-leaning nature. The Vietnam Gold Traders Association has suggested that gold as a quasi-money be treated according to its nature, and be taken out of the trade statistics to ensure its movement will not adversely affect the country’s trade deficit. Giau reasoned that enterprises must use foreign currencies to import gold so it would still affect the national current account. When it comes to trade deficit, the Government has to consider many factors, not just gold as the main factor, Giau said, rejecting concerns that any surge in gold import would put the country’s trade balance under tenterhooks. To stabilize the gold market, he said, the central bank would take measures given condition at each point in time, rather than taking gold out of the trade statistics.  Earlier, Giau had told local media that importing gold could increase trade gap but it would not affect much on the total trade balance because there would never be a gold demand big enough to aggravate the trade deficit. An executive of a big gold company agreed, saying that gold was only considered as a kind of currency if the central bank imported gold to diversify national reserves or to stabilize the market. If banks or companies import gold for purely the bullion trade, or for making jewelry products, then gold must be counted as a commodity and must be listed in the trade balance. Sharing the view, the general director of a bank said gold was considered as a currency in the world, but in Vietnam, gold was just goods for consumption, not for payment. In addition, Vietnam has yet reserved gold as a kind of currency so it would be reasonable when seeing gold as commodity. The Vietnam Gold Traders Association, meanwhile, reiterated that if gold was to be taken out of the trade balance, import and export of gold will happen upon normal demand, and this would help local gold price get closer to the world price. To support its suggestion, the association also cited a Government circular in 2009 that considered gold as a special goods as well as a kind of currency.