The Lao government has stressed the need to tighten the management of currency exchange rates amid the widening gap between the official and market rates.
In a media release issued at the end of the cabinet’s monthly meeting on August 19, the government said the increasing gap between the official and market exchange rate is having a negative impact on the price of consumer goods in Laos.
Most consumer goods in Laos are imported, so when the value of the kip drops against the major foreign currencies such as US dollars or Thai baht, product prices rise accordingly.
The Consumer Price Index for imported goods increased 0.17 percent compared to the previous month and 1.49 percent compared to the same period last year, according to a report from the Lao National Statistics Bureau.
The government’s move came after a warning from a senior government official last month that unregistered currency exchange services that violate currency regulations must be punished.
At that time, Vice President of Lao National Chamber of Commerce and Industry Ms Valy Vetsaphong said a number of foreign currency exchange services in Laos were openly flouting regulations, exacerbating the fluctuation of exchange rates.
She added that there was a greater possibility that the large amounts of money exchanged outside the system could cause fluctuation in the currency and exchange rate.
Ms Valy also cited the widespread use of foreign currencies as a possible reason causing the weak value of kip.
The value of the kip against the US dollar fell by 0.9 percent and by 3.5 percent to the baht over four months from January.
[…] trend is also driving up the exchange rate of foreign currencies against the Lao kip, especially Thai baht, said Deputy Minister of Industry […]