Local people with cash to spare should deposit their dong savings at bank to earn higher interest margin than hedging in US dollars or gold, suggested governor of the central bank (SBV) Le Duc Thuy in an interview with Thanh Nien over the sharp increase in prices of gold and greenback on the free market recently.
According to Thuy, the SBV’s announcement over issuance of new bank notes and coins would, to some extent, result in a psychological impact on depositors and thereby a great chance for gold and greenback speculators to profit from the situation.
“Anyone on the alert will see that even in the case the US dollar appreciates against the dong, the year’s appreciation rate is still much lower than the differential between interest rates of dong and greenback deposits,” said Thuy. “Meanwhile, current gold price [at around US$400 per ounce] hasn’t yet exceeded the record level of US$420 per ounce in 1996.”
“I believe that these impacts would not last for a week. If there was negative feedback in the market, the gold price on November 30 would have been higher than the previous day, whereas it even declined compared with prices on November 29,” said Thuy.
Thuy reaffirmed the central bank would not allow big changes between the official US dollar/Dong exchange rate and interest rates of dong and greenback deposits. “Over the past year, we have adopted such a policy so that it can both reflect the value of the US dollar relative to the dong and ensure the stable and efficient growth of the economy, encouraging exports and restricting imports,” Thuy said.
“The dong last year depreciated by around 2% against the greenback, and I am sure that the depreciation rate will even be lower this year, at around 1.6–1.8%,” added Thuy.