(Post by Lexie at GET Forum)
Dong Has Biggest Weekly Drop Since February on Demand for Gold
The Vietnamese dong had its biggest weekly decline since February as a surging domestic gold price pushed up demand for dollars.
Local prices reached a record high of 46 million dong ($2,210) per tael, or 1.2 ounces, this week. That was more than the $1,761.70 per ounce that gold futures for December delivery were fetching on the Comex in New York today. The central bank is permitting companies to import up to five metric tons of the metal to take advantage of the price differential, boosting demand for dollars, the central bank said on Aug. 9.
“Companies need dollars to import gold,” said Luu Hai Yen, a Hanoi-based fixed-income analyst at Thang Long Securities Joint-Stock Co. “Demand for dollars is expected to rise from now to the end of the year.”
The dong fell 1 percent this week to 20,812 per dollar as of 3:34 p.m. in Hanoi, the biggest weekly decline since Feb. 11, according to data compiled by Bloomberg. It was unchanged today.
The State Bank of Vietnam set the dong-dollar reference rate at 20,618 today, according to its website. The dong is allowed to trade up to 1 percent on either side of the fixing.
The yield on Vietnam’s five-year bonds fell four basis points, or 0.04 percentage point, to 12.55 percent this week, according to a daily fixing price from banks compiled by Bloomberg. The rate declined one basis point today. (Bloomberg)