Vietnam's central bank said it imported gold to make up for a reduction in reserves from sales to local commercial banks.
The purchases were equivalent to the amount sold at the auctions, the State Bank of Vietnam said in a statement on its website today, without giving details. The bank sold 367,000 taels in 13 auctions held from March 28 through May 3, it said. A tael is about 1.2 ounces. The auctions were held mainly to supply gold to banks that need to return about 20 metric tons to depositors by the end of June, the statement said.
The central bank in October ordered lenders to stop taking gold deposits from customers starting June 30. The bank needs to control the gold market to stabilize the dong, the country's currency, Governor Nguyen Van Binh said in an interview posted on the government's website on May 5.
"Previously, each year the amount of gold imported into Vietnam was about 100 tons, which would require a foreign- currency amount of about $4.4 billion," the bank said in today's statement. "Therefore that had very strong impact on the increase in the dong-dollar exchange rate, causing macroeconomic instability."
The gap between domestic and international gold prices is still large because supply and demand are still imbalanced in the short term, the bank said.
Cash gold traded at $1,472.13 an ounce by 9:47 a.m. London time. The price in Vietnam was 41.82 million dong per tael, according to data on the Saigon Jewelery Co.'s website. Dong traded little changed at 20,936 to a dollar.