Customers buy gold at a shop in HCM City. (Photo: VNA) In recent years, dollarisation and goldenisation have beenstrictly controlled in the country, which has helped to stabilise theVietnamese dong and fight inflation.
According to experts, the dollarisation of Vietnam's economy hasfallen sharply, from more than 20% before 2010 to more than 10% after 2010.
With the Government's policies of consistently controllinginflation and stabilising exchange rates, interest rates of dong-denominated deposits are always higherthan that of US dollar-denominated deposits, which has encouraged people toconvert the dollar into dong anddeposit at banks to get higher profits. The interest rate for USdollar-denominated deposits is currently at zero % against 8-10 % per year of dong-denominated deposits.
Despite the success, Vietnam still needs to continue to havepolicies to regulate the market, because the market still has factors affectingthe goal of limiting dollarisation in the economy.
Economist Do Duy Cuong said the increase in dollarisation wouldmake the foreign exchange market unstable which causes a trade deficit andinflation to increase, and negatively impacts confidence in the nationalcurrency. The country’s foreign exchange reserves therefore would also bereduced.
Therefore, Cuong said, it was necessary to continually stabilisethe dong value and use monetary policy tools to influence market conditions soas to make the dong more attractive than the dollar.
The interest rate policy must aim to create and maintain apositive interest rate gap between dong anddollar-denominated deposits, which will limit the tendency to hold the dollar.
Besides dollarisation, goldenisation has been also restricted inthe country since the issuance of Decree 24/2012/ND-CP on the management ofgold businesses. In fact, gold is no longer a means of payment. The currentdemand for gold does not come from speculation but the real needs of peoplesuch as jewelry, gifts or a lucky asset on the first days of the New Year.
Do Minh Phu, Chairman of DOJI Group, said before 2012, the goldprice changed continuously, which had a very bad impact on the economy. Sincethe SBV implemented Decree 24, the gold market had been effectively managed bya relatively standard legal corridor.
Experts said the gold and foreign exchange markets had been stablefor more than 10 years, making Vietnam proactive in the uncertainties of theglobal market.
Expert Nguyen Tri Hieu said the SBV had succeeded in managing thegold market, which hadn’t seen fevers with balanced supply and demand thoughthe gold price had surged to 65-66 million VND per tael.
The SBV has so far also affirmed it will continue to closelymonitor the gold and dollar price movement to take measures to stabilise themarket./.
VNA
