When will the State Bank stop selling gold? After 55 bidding sessions, the State Bank had sold 1,477,800 taels of gold, or 56.8 tons. However, the gap between the world’s and the domestic prices is still big, at VND3 million per tael, or 9 percent.  The State Bank has stated that it will continue selling gold until it is necessary. When will the State bank stop selling gold? The worries about foreign currency reserves   It’s obvious that the State Bank will not be able to sell gold “forever” because of the limited foreign reserves.  With 56.8 tons of gold sold, the amount of foreign currencies Vietnam had to spend to import gold might have reached $2 billion. It is estimated that by the end of the first quarter of 2013, Vietnam’s foreign currency reserves had reached $30 billion.  As such, just within four months since the first gold bidding session in late March, the amount of gold sold had accounted for 6 percent of foreign currency reserves. If the State Bank continues importing gold for domestic sale, Vietnam’s foreign currency reserves would get exhausted. In fact, the amount of foreign currencies Vietnam used to import has increased from 2.2 months of imports in early 2012 to 2.8 months by the end of the first quarter of 2013. In international practice, the national foreign currency reserves need to be equal to 3-6 months of imports.  Meanwhile, the countries like Vietnam, which have the high dollarization or faces the regular risks of the short term portfolio investment withdrawal, needs higher foreign currency reserves levels. The same thing once happened in 2007, when foreign investors withdrew capital from Thailand, Indonesia and some other Asian countries, which caused the monetary crisis. Vietnam also needs foreign currencies to pay foreign debts and import necessary materials for domestic production. Commenting about the role of the State Bank of Vietnam as the exclusive bullion gold manufacturer, Dr. Pham Do Chi, a gold specialist, an expert of the International Monetary Fund, said that he has never seen any central bank in the world which takes such a risky gold management role. Besides, it also has the task of managing the interest rates and deals with a lot of other problems. The State Bank of Vietnam now holds the exclusive right of importing bullion gold, manipulating gold bars, setting up the gold prices and distributing gold to commercial banks and gold trading companies through bidding. No official report about the gold supply has been released, but sources said the supplies are getting exhausted. The State Bank now organizes two bidding sessions every week instead of three as previously. State Bank’s gold policies cannot bring desired effects Nothing has changed since the day the State Bank of Vietnam began taking actions to tighten the gold market management. The domestic gold price is still much higher than the international price, while the gold hoarded by people still have not been put into production and investments. Associate Professor Ngo Tri Long, an economist, said the government Decree No. 24 aiming to fight the goldenization has not obtained the desired effects. Long noted that the main goal of the fights is making people not to use gold as a payment instrument and not to hoard gold as their assets.  Meanwhile, by putting 52 tons of gold into circulation, the State Bank has made the amount of gold in circulation increase. Source: NCDT