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Vietnam lets banks restart offshore trading to push local gold price down
By Ngo Thi Ngoc Chau
Thursday, October 6, 2011
Vietnam's central bank has allowed five banks and Saigon Jewelry Co (SJC), the country's top gold trader, to reopen offshore gold trading accounts to help narrow the gap between domestic and international prices, state-run media said on Thursday.
The six institutions will sell up to six tonnes of gold from their stock to increase supply in the domestic market, an online report of the official Thanh Nien newspaper said.
Partly private DongA Bank, Asia Commercial Bank, Techcombank, Eximbank, Sacombank, and SJC will buy and sell gold at the same price quoted by SJC, the news website VnExpress (vnexpress.net) said.
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In March 2010 the central bank ordered Vietnamese gold traders to close offshore trading accounts in a move to restrict gold transactions to help stabilise the domestic currency, the dong.
The State Bank of Vietnam granted quotas to banks and gold trading companies to import at least 13 tonnes of the metal in August and September to cut the premium.
Domestic prices remain far higher than international prices and hit a record gap of 4.3 million dong ($206.4) a tael above the world price on Sept. 26, according to domestic gold trading companies.
One tael is equivalent to 37.5 grams or 1.21 troy ounce.
The wide gap has been putting pressure on the dong, which weakened to 21,550 per dollar on the unofficial markets on Wednesday, or 3.6 percent below the weak end of the central bank-mandated trading band.
The dong tends to fall against the dollar in the unofficial markets whenever there is a high premium because speculators accumulate the greenback to smuggle gold to take advantage of the premium, traders said.
SJC was selling a tael at 44.12 million dong ($2,120) at 0830 GMT in Hanoi, around 1 percent lower than a day earlier.
The move in Vietnam's domestic markets ran counter to the trend in the international market, where gold ticked up in volatile trade on Thursday.
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