Kip interest rates declining
Kip interest rates declining
Commercial banks in Laos are continuing to lower interest rates paid for Lao kip deposits, amid increasing public confidence in the stability of the national currency.
According to data from the Bank of Lao PDR, in the Lao commercial banking system, the average interest rate for Lao kip for term deposits with a maturity of 12 months was estimated at 8.76 percent in April, dropping from 8.80 percent in 2011 and 9.81 percent in 2010.
Meanwhile in 2005, the deposit interest rate of Lao kip in 2005 was 10.46 percent.
Meanwhile Thai baht and US dollar interest rates for one year term deposits continued to rise in April. The deposit interest rate for Thai baht was 3.70 percent in April, increasing from was 3.41 percent in 2011 and 3.24 percent in 2010.
The average deposit interest for US dollars is now 3.63 percent, increasing from 3.53 percent in 2011 and 3.23 percent in 2010.
The central bank says in its annual report, which was made available to media earlier this month, that the interest rates on deposits in the Lao banking system were adjusted in consistence with domestic and international economic conditions.
One of the senior bankers in Laos, Mr Somphone Sisenglat commented yesterday that the lower interest rates being paid for Lao kip deposits was one of the best reflections of confidence in the stability and strength of the national currency.
He said that the rising value and stability of Lao kip over the past years has encouraged people to deposit money in Lao kip, one of the main reasons commercial banks have lowered interest rates for the national currency.
“When the commercial banks see that they have a sufficient supply of Lao kip, they normally decrease deposit interest rates,” he said, adding that the move is one of the measures to ensure the effective operation of the commercial banks.
According to a report from the Bank of the Lao PDR, Lao people now like to deposit money in Lao kip, after seeing that the value of the Lao kip has been stable in recent times. As of December, kip deposits were estimated to represent about 45 percent of total deposits, while the rest are in either Thai baht or US dollars.
Mr Somphone said that increasing interest rates for Thai baht and US dollars also reflects rising demand for Thai baht and US dollar in the country.
“The commercial banks like to release loans for mega investment projects, which require import of materials,” he said, adding that increasing interest rates for foreign currency was one way to mobilise foreign investment in the country.
Other banks said the increasing value of interest rates for foreign currencies was also due to international economic conditions.
vientiane times
