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The ban on gold imports since May 2008 led to a gap between domestic and international prices, but in recent days, traders say that spread has triggered a surge in demand for dollars.
On Tuesday the dong broke through the level of 19,000 to the dollar, and sank further on Wednesday to 19,800, before rebounding to around 19,000.
Gold leapt to around 29 million dong per tael on Wednesday, or $1,261 per troy ounce at an exchange rate of 19,000 dong per dollar. Later it came back down to around 27.5 million dong. Internationally, gold stood at around $1,115 an ounce. The central bank blamed domestic speculators for pushing the gold price above world levels.
Offshore dealers covering Vietnam said gold bars had been smuggled in from neighbouring countries to meet growing demand.
'The thing is, people are cautious,' a dealer in Singapore said. 'The domestic price is so high because they haven't imported gold for a long time. Basically, there's a shortage of physical gold.'
(Reporting by John Ruwitch and Ho Binh Minh in HANOI and Lewa Pardomuan in SINGAPORE; Editing by Clarence Fernandez)
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