Vietnam stops gold import to prop currency

Hanoi, Vietnam -- Vietnam, in an effort to prop up its declining currency amid soaring inflation, suspended the importation of gold.

Traders said the government, which controls gold imports through quotas, has withdrawn licenses as record imports of gold bars have made Vietnam the largest market for bullion, the Financial Times reported.

Gold imports also have contributed to the rise in trade deficit to $17 billion in the first half of this year from $5.2 billion in the same period of last year, the Times reported citing figures in the state-controlled Lao Dong newspaper. Vietnam's trade deficit last year was $12.4 billion.

The currency dong continues to slide. Adjustments in the official exchange rate this month had devalued the dong by 2 percent but the currency is being further discounted in the black market, fueling the flight to gold, the report said. Gold prices have jumped to more than $1,000 a troy ounce.

Copyright 2008 by United Press International.