Central bank tightens foreign exchange rules
Central bank tightens foreign exchange rules
The Bank of the Lao PDR has restricted the sale of foreign currencies to people, believing the move will encourage Lao people to use the national currency more.
The central bank announced the new currency exchange rule this week, stating that anyone who wanted to convert 20 million kip or more into foreign currency must provide solid evidence that they really need the foreign currency otherwise the banks will reject their request.
People who want to exchange less than 20 million kip do not require any documents except a photocopy of their identification card, according to the announcement.
In the past people did not have to provide the bank with any information when they wanted to exchange more than 20 million kip.
A senior official at the Central Bank's Monetary Policy Department told Vientiane Times yesterday the central bank's decision to restrict the sale of foreign currencies was part of its effort to encourage people to use the national currency while they are in Laos.
“There is no reason or need for you to hold foreign currency while you are in Laos,” the bank official said in an interview.
The official confirmed that the central bank did not order commercial banks and exchange service shops in the country to stop selling foreign currencies to customers despite the fact that people were finding it difficult to buy other currencies, especially Thai baht and US dollars.
“It is the right of the commercial banks to make the decision as to whether or not they want to sell foreign currencies,” the official said, adding that some of the banks only wanted to sell foreign currency to their regular customers.
At present, the commercial banks allow their customers to withdraw money from their bank accounts when they are away in foreign countries, in particular Thailand.
A number of people expressed concern over the drop in the value of the kip against other currencies as they were finding it difficult to purchase foreign currency. At present a number of shops in Vientiane are demanding Thai baht and US dollars as they import their merchandise from Thailand and other countries.
The Bank of the Lao PDR told the National Assembly conference in the middle of last month that the bank still had strong foreign reserves, sufficient to secure imports for about five months. The bank also made a strong commitment to keep the value of the kip stable. Any change to the value of the kip should not go above five percent.
Observers said the value of the kip will change within the planned framework if the Bank of the Lao PDR can secure the availability of foreign currencies to major importing firms in the country at a set foreign exchange rate.
They also said that Lao people will not spend foreign currencies in Laos if they use kip to purchase foreign goods in the country, in particular vehicles which have seen a rising demand over the past few years.
vientiane times
