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SBV Governor: domestic gold prices not abnormal   2011-07-29 - VTC

Governor of the State Bank of Vietnam, Nguyen Van Giau said that the public debts in Greece and the uncertainties in some European countries, plus the public debt problems in the US, have all led to the domestic gold price increases; while he cannot see any problems in the market.

Governor of the State Bank of Vietnam Nguyen Van Giau

Governor of the State Bank, Nguyen Van Giau talked with the press in the afternoon of July 26, on the sideline of the ongoing National Assembly’s session.

What would you say about the implementation of the monetary and fiscal policies in the last time?

I think that we have only done the monetary policies well, while we have not gone far with the cutting of public investments. Especially, many provinces have even asked for the increases in public spending.

What should we do to push up the adjustment of the fiscal policies, then?

At the meeting with the Prime Minister and at the regular meeting last Sunday, the Prime Minister once affirmed that Vietnam needs to persist with the six comprehensive solutions mentioned in the Resolution No 11 on fighting inflation. We need to take measures comprehensively, not to attach too much importance to some solutions and not to disregard other solutions.

Monetary policies are really “sensitive”, and we sometimes feel that the tightening of the monetary policies have gone a bit too far, because any adjustments would have immediate impacts on the market.

Meanwhile, when we cut the public investments by 80 trillion dong, we would feel that we go slowly, step by step. The thing we need to do is to convey information and government’s messages in a transparent way, which will create people’s confidence.

The foreign currency market seems to develop better than the gold market. Do you think that the gold price escalations and unstable prices would destroy the stability of the foreign currency market?

I think that the public debts in Greece and the uncertainties in some European countries, plus the public debt problems in the US all have led to the domestic gold price increases, while he cannot see any problems in the market, while we cannot see any problems here.

Regarding the stability on the foreign currency market, I think that this is the big success of the implementation of the government’s Resolution No 11. In some cases, the spirit of the resolutions is the measures to ease the total demand, including the investments in consumption and imports. The foreign currency supply, as per the government’s report, has increased by 33 percent, while the demand for foreign currencies has decreased, and the imports have also decreased.

The bank loan interest rates have increased too sharply. Will the State Bank of Vietnam take any measures to ease the interest rates? Do you think that the existence of too many banks have led to the interest rate competition?

I know that people have doubts that Vietnam would loosen the monetary policies soon. However, Vietnam follows another way. The government’s resolution and the instructions of the Prime Ministers show that when applying the measures to curb inflation and ensure social security, the interest rate increases are inevitable when we withdraw money from circulation and restrict credit demand. However, when we decide to loosen the monetary policies, we need to do this step by step.

Some experts say that it is impossible to control foreign currency trade. Meanwhile, the Ha Trung dollar black market has resumed its operation. What would you say about that?

There are two things that need to be done to control the foreign currency market: making policies and implementing the policies.

Banks can act as counselors for making policies, but they need the cooperation from other branches and ministries to implement the policies.

I know that once we loosen the control, the black market would appear again. I know that foreign currency trade activities are carried out at Ha Trung market. However, we still can control the market; therefore, the activities have not made any big impacts.

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