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Central bank withdrew VNĐ93 trillion to stabilise the gold and forex markets

VIETNAM, May 28 - HÀ NỘI — The State Bank of Vietnam (SBV) withdrew more than VNĐ93 trillion out of the market through selling gold and the US dollar to stabilise the metal price and regulate the foreign currency market in the past month.

According to SBV’s data, as of May 24, it sold a total of 48,500 taels of SJC gold with the winning bid price of VNĐ81.3-89.4 million per tael. It meant the estimated amount of money the SBV earned from the gold sales was about VNĐ4.2 trillion.

In addition to the gold sale, the SBV also sold the dollar to stabilise the foreign exchange market during the past month. It was estimated from April 22 to May 24, the amount of dollar that the SBV sold for immediate delivery to commercial banks exceeded US$3.5 billion. With the selling price of VNĐ25,450 per dollar, it is estimated that the amount of đồng that the SBV withdrew in response to the amount of dollar sold was about VNĐ89 trillion.

The SBV’s move was made to stabilise the gold and foreign currency markets after the prices of gold and dollar accelerated sharply over the past month. While the greenback exceeded the VNĐ25,000 per dollar threshold, gold also hit VNĐ90 million per tael.

The SBV’s sale of gold and greenback has directly reduced the đồng supply to the market and shrunk the nation’s foreign exchange reserves.

Due to the SBV’s đồng withdrawal, the đồng liquidity of the banking system has shown signs of tightening in recent sessions. Accordingly, in two consecutive trading sessions on May 22 and May 23, nine and eight commercial banks borrowed VNĐ25 trillion and VNĐ43.06 trillion, respectively, from the SBV through valuable paper mortgages on the open market operation (OMO) channel. The amounts hit record highs in recent years.

Along with the SBV’s decision to increase the OMO interest rate to 4.5 per cent per year and continue to maintain the bill issuance channel, the đồng interest rate on the interbank market currently exceeds 5 per cent per year in all terms. This shows that the đồng is no longer cheap on the interbank market.

According to industry insiders, the SBV’s sale of gold and dollar has affected the đồng liquidity, but it is still necessary to stabilise the gold market and foreign currency market. — VNS

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