Kip still weak against major currencies
Kip still weak against major currencies
The kip has been weakening against the US dollar and Thai baht as demand for these foreign currencies is high.
These currencies are needed to buy imported goods but are in short supply, a senior economist has said.
Depreciation of the kip is currently good for exports but is having an impact on imports, Vice President of the National Institute for Economic Research, Dr LeeberLeebuapao, told Vientiane Times yesterday.
However, if the dollar and baht remained strong it would be not good for economic expansion as it would increase the inflation rate and living costs, he said.
A shortage of foreign currency supply increased the risk for business operations, especially the purchase of foreign goods and foreign debt payment, Dr Leeber said.
Comparing the first three months of this year to the same period last year, the kip depreciated 0.7 percent against the US dollar from 8,134 kip to 8,195 kip and by 2.2 percent against the Thai baht from 229.7 kip to 235 kip, a report to the National Assembly noted.
On Tuesday, Banque pour le Commerce Exterieur Lao Public (BCEL) was buying one US dollar for 8.183 kip and selling for 8,223 kip, while buying one Thai baht for 238.44 kip and selling for 240.22 kip.
The exchange rate last year between the kip and dollar averaged 8,129 kip a dollar; in 2015 the dollar appreciated 0.03 percent or to 8,131 kip, while the kip to baht rate changed 3.62 percent from 240.24 kip to 231.80 kip, Minister of Planning and Investment Dr SouphanhKeomixay told the National Assembly.
These rates were within expected parameters, according to the Ministry of Industry and Commerce.
Currency exchange rate fluctuations especially affect imported goods and even products produced in Laos, Minister of Industry and Commerce Ms KhemmaniPholsena said.
To ensure financial stability, reduce the impact of imported goods and minimise inflation, the Bank of the Lao PDR has allocated an exchange rate adjustment range of plus or minus 5 percent.
The bank had allocated a daily kip to dollar reference exchange rate to commercial banks and money exchange unit around the country in the area of plus or minus 0.25 percent, 0.75 percent for kip to baht, and 2 percent for other currencies, Vice Governor of the Bank of the Lao PDR, Mr SonexaySitphaxay, said.
The main factors causing the depreciation and appreciation of the kip are currency supply, foreign project investment, official development assistance, and the number of tourists, Dr Leeber added.
