VIENTIANE, Dec 17 (Xinhua): The continuing depreciation of the kip, the Lao currency, is creating a major roadblock in the government's efforts to rein in inflation, a Lao official has said.
The kip has fallen in value by 19.44 percent against the US dollar and by 18.02 per cent against the Thai baht over the past nine months, Lao Economic Daily on Thursday quoted Bounleua Sinxayvoravong, governor of the Bank of Lao PDR (BOL), Lao central bank, as saying at the ongoing fourth ordinary session of the National Assembly (Ninth Legislature) of Laos.
Bounleua told members of the National Assembly (NA) that the weak kip is fundamental in driving inflation, which was recorded at 38.46 percent in November.
He said collaboration between the sectors involved in currency regulation was not sufficiently comprehensive, meaning that most of the foreign currency earned from exports and foreign investment was not entering the banking system.
Another factor contributing to the weak kip is the U.S. Federal Reserve's hiking of interest rates as it wrestles to curb fast rising prices.
Bounleua said that BOL will not only ensure that more foreign currency sourced from exports and investment enters the banking system, but also do more to regulate exchange rates.
In September 2021, some 419 out of the 550 money exchange units were tied to commercial banks and have since operated under the authorization of banks. This was done in a bid to tackle the difference in exchange rates between commercial banks and money-changing outlets.
Bounleua explained that Laos is facing challenges in regulating currency exchange rates because the country imports substantially. Additionally, many Lao people keep foreign currencies in reserve and use these currencies for trade rather than kip. - Xinhua
