Rumors surrounding the replacement of the current Vietnamese currency have continued to put adverse impacts on the domestic dollar and gold markets, despite repeated warnings from state agencies against the unfounded information.
The currency replacement rumor has sent dollar prices skyrocketing, especially on the unofficial market, since the beginning of the month.
The greenback on the ‘black’ market reached a record VND23,000 a dollar on December 3 as the rumor mill went into overdrive.
Accordingly, rising dollar prices sent gold prices in Vietnam through the roof, with some traders taking advantage of the rumors to manipulate the rates.
The market manipulation widened the gap between Vietnamese and global gold prices, as well as the margin between asking and selling quotes at local gold shops.
On the global market, gold closed at $1,171.1 an ounce on Wednesday, or VND32.08 million (US$1,432) a tael (37.5 grams), while Vietnamese gold shops quoted the precious metal at VND36.45 million ($1,627) a tael, a price gap of VND4.37 million ($195) a tael.
Vietnam’s gold prices move in reverse direction from global peers, fretting local buyers.
“I have no idea why prices in Vietnam rose by VND400,000 [$17.86] a tael while global rates are falling,” Chinh, a resident in Ho Chi Minh City, told Tuoi Tre (Youth) newspaper.
The woman is sitting on hot bricks, having borrowed loans in gold when price was only VND34 million ($1,518) a tael.
Gold has lost $167 an ounce, or VND4.58 million ($204) a tael, on the global market since last month, but prices keep fluctuating strongly in Vietnam, with the false currency replacement largely to blame, according to industry insiders.
“The rumors first rallied the dollar market, and the gold market was affected in the same manner,” Nguyen Thi Cuc, deputy general director of PNJ, a major gold trader, explained.
Nguyen Thanh Long, chairman of the Vietnam Gold Traders Association, said many gold shops have taken advantage of the rallied market to boost prices even further.
While SJC, the country’s largest gold trader, set the gap between ask and bid prices at only VND400,000 a tael at Wednesday’s closing session, the difference was VND500,000 a tael at gold shops.
Search for rumor makers
The State Bank of Vietnam quashed the groundless rumors in a public warning earlier this month, and Prime Minister Nguyen Xuan Phuc reiterated the denial at a government conference on Tuesday.
The premier reassured that the government is totally capable of stabilizing the foreign exchange rate and the macro-economy, without forgetting to task relevant agencies with tracing the rumor makers.
On Wednesday, the foreign exchange agency under the State Bank of Vietnam also reiterated that the central bank is closely watching the dollar and gold markets and will have timely intervention if necessary.
“The public should not believe rumors and remain cautious about any decision to sell or buy,” the agency head Nguyen Ngoc Canh warned.