As gold smuggling runs rampant, Vietnam casts around for ways to tame market
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Gold smuggling is on the rise in Vietnam, fueled by a lack of official supplies and flight-to-safety demands amid a struggling economy. The increase in gold imports, which were about 55.5 tonnes last year compared to 39.8 tonnes in 2020, is predominantly via illegal channels due to strict import regulations. The rise in smuggling exerts pressure on the dong as smugglers need to buy dollars in the black market to pay for the commodity. The dong has weakened 2.9% this year, closing at 24,962 against the dollar. Economists warn that the demand for dollars to pay for gold imports is making it hard for the central bank to curb inflation and negatively impacting the economy. The National Financial and Monetary Policy Advisory Council has proposed ending the state monopoly on gold imports and bullion production to narrow the local premium over the international rate and reduce the need for smuggling. Ending the monopoly would also help boost tax revenue from official imports and reduce smuggling.
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