HANOI - Vietnam's central bank said on Thursday it would consider granting permits for gold imports if prices in the domestic market rose "unreasonably high", helping to drive world bullion prices up to another record.
Spot gold, which has rallied 8 percent over the past month, hit an all-time peak for a third straight session on Thursday, rising above US$1,355 an ounce, as a weak dollar pushes investors to bullion in the face of economic uncertainty and speculation of further monetary easing by central banks.
Nguyen Quang Huy, director of the foreign exchange department of the State Bank of Vietnam, said gold prices were still largely in line with world markets but the central bank was closely monitoring the situation.
"If gold prices in the country rise unreasonably high, the state bank may consider giving permission to businesses to import gold, at appropriate volumes and times, to stabilize the market so that the price of gold in the country sticks with the price of world gold," he said on the central bank's website, www.sbv.gov.vn.
Dealers said the Vietnamese comments helped nudge the price of gold up.
"People are going to focus on the fact that the Asian physical market will be tight. Last time Vietnam opened the door to gold imports, gold went up $20. In percentage terms, it could translate into $30 today," said a Singapore-based trader.
In Vietnam, gold rose to VND32.80/32.89 million per tael from VND32.67/32.75 million early on Thursday, according to Saigon Jewelry Corp, the country's biggest gold dealer. One tael equals 1.21 troy ounces.
The unofficial exchange rate stood at 19,800/19,850 dong per dollar at a major Hanoi gold shop, putting the gold price in Vietnam at a premium of about $20 to global market prices.
Vietnam banned gold imports in mid-2008 to help tackle a trade deficit as the economy overheated, but the central bank has granted import quotas on a selective basis since.
Repeat scenario
Foreign exchange dealers have said the rise in global gold prices, and curbs on imports, had fed smuggling. Demand for dollars to buy this gold overseas was pushing down the value of the dong.
The scenario appears to be a repeat of pressures that built up in Vietnam about a year ago, leading the central bank to grant quotas for several tons of gold imports.
The pressure on the dong continued, however, and the central bank devalued the currency and raised interest rates just weeks after relaxing the import ban.
Nguyen The Hung, chief executive officer of Vietnam Gold Corp, said domestic supply was limited as investors had sold and businesses had increased gold exports when prices hit VND29-30 million per tael.
He said the differential between domestic and world gold prices had to be addressed. "The gap requires measures from the central bank," he said.
Traders said there had been a significant amount of gold suggled into Vietnam from neighboring countries and Thailand.
Gold rose to a record high in Vietnam this week as the metal continued to advance on the global market due to a negative economic outlook..jpg)