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No wonder Vietnam can never get enough gold
Vietnam Devalues Dong Again in Step to Alleviate Woes
By John Ruwitch and Ngo Thi Ngoc Chau
Reuters
Friday, February 11, 2011
http://www.reuters.com/article/2011/02/11/vietnam-economy-currency-idUSS...
HANOI, Vietnam -- Vietnam devalued its beleaguered currency on Friday for the third time in a year, as authorities start to try to address festering economic problems that critics say have been brushed aside in the pursuit of growth.
The State Bank of Vietnam dropped the dong's reference rate by 8.5 percent against the dollar and narrowed the currency's trading band to 1 percent from 3 percent on either side of that midpoint rate.
The combined effect pulled the weak limit of the band down about 7 percent to 20,900 from 19,500, and brought official and black market exchange rates closer to alignment.
The International Monetary Fund welcomed the changes, but said authorities needed a "broader set of policies" to restore macroeconomic stability.
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Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Extending the Mineralization of the Southwest Vein on the Property
Company Press Release, October 27, 2010
VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:
-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.
-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.
-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.
Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface.
"The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."
For the company's full press release, please visit:
http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf
The dong, unlike nearly all other Asian currencies, has been weakening against the U.S. dollar. Confidence in the local currency is low in Vietnam, where dollars and gold are widely used as currencies for major purchases and as a hedge against inflation.
Friday's devaluation was the sixth -- and by far the biggest -- in nearly three years. Exactly one year earlier, the dong was devalued by 3.2 percent, and in August there was a 2.0 percent devaluation. The currency's slide has come during a turbulent period in which authorities have grappled with volatile inflation, wide trade and fiscal deficits, rising global gold prices along with sinking confidence in the dong. For a timeline click .
Economists applauded the move but said it would not be a panacea and the central bank now needed to target double-digit inflation, which the devaluation could exacerbate.
"This is a bold and decisive step by the central bank," said economist and former government advisor Le Dang Doanh. "But the devaluation should be just part of a package of measures that the government should take."
Many economists and international organisations, including the IMF, had said authorities were overly focused last year on attaining high gross domestic product growth before a January meeting, held once every five oyears, of the Communist leadership. Inflation soared to near two-year highs.
Fitch, Moody's and Standard & Poor's and all downgraded Vietnam's sovereign credit rating last year, citing macroeconomic imbalances.
The new reference rate was 20,693 dong per dollar, down from 18,932 in place since mid-August 2010. After the move, currency traders said the dong was being quoted about 40-60 dong beyond the band on the interbank market.
The central bank said in a statement it would monitor the reference rate, which it sets each day, "relatively flexibly" in the coming time. Some traders said that comment and the narrower trading band implied that the central bank may move the reference rate more regularly.
Since June 2008 the dong reference rate has been devalued by more than 20 percent and foreign exchange reserves have fallen sharply, making it increasingly difficult for the government to break a cycle of devaluation expectations. Most other currencies in the region gained ground against the weak dollar.
Minister of Planning and Investment Vo Hong Phuc was quoted in state media earlier this week as saying foreign exchange reserves were "more than $10 billion" at the end of 2010. Reserves were nearly $24 billion at the end of 2008. In December 2009, the central bank estimated reserves at $16 billion.
Doanh said the low reserves had left the central bank little choice but take a big enough step to realign exchange rates.
Economists at Standard Chartered said the devaluation should ease downward pressure on reserves and help exports, but inflation would remain a problem.
"The latest devaluation could also lead to higher imported inflation in the months ahead, especially when combined with rising global commodity prices. While the central bank remains comfortable with the current level of interest rates, we see a need for higher rates in order to pre-empt economic overheating risks," the bank wrote on Friday.
Australia and New Zealand Banking Group also said the devaluation underscored the need for rate hikes.
The consumer price index rose to a near two-year high of more than 12 percent in January.
The central bank raised the base rate in early November by 100 basis points to 9 percent. Between then and January, while the base rate has stayed flat, it hiked the reverse repo rate on 7-day open market operations by 400 basis points to 11 percent in a tightening move.
Still, businesses in Vietnam have been complaining that lending rates are too high at up to 20 percent, and officials say they hope to eventually bring rates down.
The dong has languished outside its band for more than four months on unofficial markets, hovering in recent weeks about 6-7 percent beyond the weak limit.
On Friday morning the dong was quoted at 21,300/21,400 per dollar on the unofficial market in Hanoi, according to two major gold shops that double as a foreign exchange dealers.
Stocks dipped slightly after the news, but recovered with the benchmark Vietnam Index closing down just 0.05 percent and the Hanoi Index gaining 0.13 percent.
"For the short term (the devaluation) is bad, but after a week I expect more foreigners will come into the stock market to trade, so it'll be good for the market," said Quach Manh Hao, Deputy Director of Thang Long Securities.
"This is a message to the market that the government will focus on stabilising foreign exchange for the whole year."
Currency traders and economists had widely expected the State Bank of Vietnam to make a move around this time after a senior official in early November ruled out a devaluation before Tet, the lunar new year festival, saying that authorities would instead tap foreign exchange reserves to try to meet dollar demand.
The Tet holiday ended on Monday and market activity resumed on Tuesday.
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Prophecy Resource Spins Off Platinum/Palladium Venture:
World-Class PGM Deposit in Yukon
Company Press Release, January 18, 2011
VANCOUVER, British Columbia -- Prophecy Resource Corp. (TSX-V:PCY)and Pacific Coast Nickel Corp. announce that they have agreed that PCNC will acquire Prophecy's Nickel PGM projects by issuing common shares to Prophecy.
PCNC will acquire the Wellgreen PGM Ni-Cu and Lynn Lake nickel projects in the Yukon Territory and Manitoba respectively by issuing up to 550 million common shares of PCNC to Prophecy. PCNC has 55.7 million shares outstanding.
Following the transaction:
-- Prophecy will own approximately 90 percent of PCNC.
-- PCNC will consolidate its share capital on a 10 old for one new basis.
-- Prophecy will change its name to Prophecy Coal Corp. and PCNC will be renamed Prophecy Platinum Corp.
-- Prophecy intends to distribute half of its PCNC shares to shareholders pro-rata in accordance with their holdings.
Based on the closing price of the common shares of PCNC on January 17, $0.195 per share, the gross value of the transaction is $107,250,000.
For the complete announcement, please visit:
http://prophecyresource.com/news_2011_jan18.php
