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Monday, July 15, 2024

Bank of Laos Vows to Resolve Foreign Exchange Problems

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The Bank of the Lao PDR held a press conference today to announce solutions it has proposed for the ongoing foreign currency problem faced by the country.

Governor of the Bank of the Lao PDR (BOL), Mr. Sonexay Sitphaxay, said that the central bank would implement a number of measures to ensure foreign currency enters the economy at an appropriate volume.

He said that he understands that current issues are causing panic among members of society who are concerned about the nation’s financial stability.

Mr. Sonexay said BOL would heavily promote the use of Lao kip among society and improve the quality of credit systems to ensure they are appropriate to market demand.

This will help to protect against another liquidity squeeze, according to Mr. Sonexay, who said the bank would use some instruments of monetary policy to relieve pressure and lower demand for the import of consumer goods.

Governor of the Bank of the Lao PDR, Mr. Sonexay Sitphaxay
Governor of the Bank of the Lao PDR, Mr. Sonexay Sitphaxay, speaks at a special press conference (Photo: Lao Journalists Association).

Such instruments include an increase in interest rates and the minimum reserve requirement for Lao kip, while the bank will propose the government issue an appropriate volume of bonds.

At the same time, the Bank of the Lao PDR will coordinate closely with the Ministry of Public Security to crack down on individuals and entities that engage in currency manipulation or operate illegal exchange activities that destabilize the local economy.

The central bank will work with relevant sectors and departments to improve mechanisms for the management and provision of foreign currencies related to the import of commodities necessary for people’s livelihoods.

Mr. Sonexay also said the Bank of the Lao PDR will continue to implement measures to try to ensure foreign currency enters the banking system or institute measures facilitating the bank in purchasing larger volumes of foreign currencies to better meet the demands of individuals and businesses.

Laos will also negotiate mechanisms to include the use of Lao kip in bilateral trade agreements and promote the use of local currency, creating demand for the currency of Laos among the country’s trading partners.

This will be done concurrently with programs to promote domestic production to reduce imports and create more demand for commodities produced in Laos.

Finally, the Bank of the Lao PDR suggests relevant sectors implement measures to reduce the demand for foreign currency, such as improving policies and legislation related to foreign debt management.

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