Hanoi - The US dollar and gold prices dropped sharply Thursday in Vietnam after the State Bank lifted a ban on gold imports in a bid to end a huge run-up in prices in recent days.

The State Bank had banned imports of gold since May 2008 to limit the country's trade deficit, but on Wednesday, it lifted the ban because of a rising gap between domestic and international gold prices. The gap had led to speculation and driven up the black-market exchange rate for the dollar.

As of 11 am Thursday, the black market exchange rate offered at gold shops in Hanoi had fallen to 18,600 dong to the dollar, from up to 20,000 on Wednesday.

The official government exchange rate was 17,022 dong to the dollar. Commercial banks, which are allowed to trade at up to 5 per cent on either side of the government rate, were selling dollars for 17,873 dong each.

The price of gold in Vietnam fell Thursday to 1,515 dollars per tael, down from 1,639 dollars on Wednesday. That was still higher than the world gold price of 1,119 dollars per ounce, or 1,349 dollars per tael.

The State Bank said Wednesday that gold importers would be allowed to import a volume sufficient to stabilize the market and combat speculation.

The state-run newspaper Thanh Nien on Thursday quoted the governor of the State Bank as saying that despite the gap between the official and black-market exchange rates, the bank had decided not to expand the trading band for commercial banks from 5 per cent on either side of the reference rate. (dpa)