Bank for Investment and Development of Vietnam, a state-owned lender, is seeking approval from the government to establish a national gold exchange in an attempt to boost protection for investors, a company official said.
The exchange would be regulated by the country's central bank, said Do Thi Phuong Trang, an officer at the treasury department at BIDV, as the bank is commonly known. BIDV is the country's second-biggest state-owned bank by total assets.
Demand for gold in Vietnam has jumped as investors seek protection from a declining currency and inflation that has accelerated to the highest level in at least 20 months. Vietnam consumes more gold per head than India, the biggest overall user. Spot gold touched an all-time high of $1,431.25 this week on investor demand for an alternative to debasing currencies.
"A standard exchange is required," said Dinh Nho Bang, chairman of the Vietnam Gold Traders Association. It would be "the first official trading floor, which would create a fair playing field for investors," he said. The country used to have more than 20 gold-trading floors that operated "spontaneously" with no government regulation, according to Bang.
Vietnamese Prime Minister Nguyen Tan Dung ordered the closure of all gold-trading floors by March 30 this year on concern that they posed risks to investors and the financial system.
"The closure of these trading floors was essential because they operated separately without reflecting the real supply-demand situation, and investors were the ones who suffered the most," said the BIDV's Trang in an interview yesterday.
Gold for immediate delivery gained 0.3 percent to $1,391 an ounce at 1:12 p.m. in Singapore and has climbed 27 percent this year, heading for a 10th annual gain.
In Vietnam, the metal traded as high as VND35.85 million ($1,838) per tael, according to an information service run by state-owned Vietnam Posts & Telecommunications. It reached a record VND38.2 million on Nov. 9. A tael is a traditional measure equal to about 1.2 ounces.
The dong, which has dropped 5.2 percent this year, traded at 19,490 per dollar Friday, according to data compiled by Bloomberg News. It was trading as low as 21,070 per dollar in the so-called black market in Hanoi, according to a telephone- information service run by state-owned Vietnam Posts & Telecommunications.
The State Bank of Vietnam weakened the dong's reference rate by 2 percent to 18,932 per dollar on Aug. 18, the third devaluation since November last year.
Vietnam's consumer price index climbed 11.09 percent in November from a year earlier, the fastest pace since March 2009. The benchmark VnIndex of equities has dropped 6.7 percent since June 30, trading at 9.5 times estimated earnings, making it Asia's second-cheapest after Pakistan.
"Investors have been waiting for an official trading floor because they want to be protected," said Vo Thanh Tam, vice general director of Asean Gold Joint-Stock Co.