By Ben Bland
Financial Times, London
Monday, February 28, 2011
The desire among many Vietnamese to keep gold as a store of value is both a cause and a symptom of the fast-growing nation's economic trouble.
Now the government has said it will ban the trading of gold bars in the "free market" as part of a package of measures designed to rein in soaring prices and tackle deep-seated economic imbalances. But it has befuddled investors and ordinary people alike.
Buffeted by persistent inflation and weakness in their currency, many Vietnamese prefer to save in gold and dollars. Their fondness for gold, which is often used to settle property deals and other large transactions, and for dollars puts further downward pressure on their currency, the dong, in a negative feedback loop from which it is hard to escape.
Vietnam's central bank said on Friday that to prevent speculation and market manipulation, the government would issue a decree in the second quarter of this year banning the free-market gold trade and thereby preventing cross-border smuggling. But, given the government's tendency to issue decrees and circulars by the truckload, gold traders and economists say the real impact of this latest pronouncement will be determined by officials' actions rather than words.
"Vietnam Central Bank Proposes Banning Gold Bullion Trading", The Wall Street Journal, February 28, 2011
"Vietnam eyes ban on unofficial gold bullion trade", AsiaOne, February 28, 2011