The Bank of the Lao PDR (BOL) has put out a notice preventing currency exchange units associated with commercial banks from selling foreign currency.
The notice states that currency exchange businesses will be permitted to purchase foreign currencies, but won’t be able to sell any other currency apart from Kip.
Considering the continued depreciation of the Kip and the resulting inflation which has driven up the cost of goods, this decision was taken to regulate foreign currency circulation within the country.
Currency exchange businesses that represent commercial banks are permitted to purchase US dollars at rates within a range of +3/-3 percent of the reference rate issued by the Central Bank. The purchase rates of other currencies also should not exceed the amount authorized by commercial banks they are associated with.
Commercial banks are allowed to set their exchange rate within the bracket of +4.5/-4.5 percent in relation to the daily reference rate published by the Monetary Policy Department of the Central Bank.
Purchasing and selling rates for other foreign currencies like the Baht, Yuan, and Euro, must not exceed 1 percent of the daily rate set every day.
The Central Bank supports the government’s efforts to expand the role of commercial banks in purchasing and selling foreign currencies and regulating foreign currencies in response to the depreciation of the Lao currency. In this regard, commercial banks and currency exchange businesses must inform exchange rates to customers on accessible platforms like their website or social media, as well as keep the Central Bank updated on the amount of currency being traded every day.
The Bank of the Lao PDR announced in June that commercial banks and currency exchange providers will be subject to new limits on the sale of foreign currencies.
Only commercial banks are now permitted to purchase and sell foreign currency with importers, exporters, investors, and other legal companies.
