US dollar gaining strength, economist says
US dollar gaining strength, economist says
The value of the US dollar is expected to remain high over the coming months as the world's largest economy moves towards recovery, according to a prominent local economist.
Dr Mana Southichack made the prediction yesterday amid the rising value of the US dollar against both the Lao kip and the Thai baht.
The value of the US dollar rose from one dollar per 7,500 kip five months ago to over 8,000 kip per dollar recently and from 30 to 32 Thai baht per dollar.
The value of the greenback saw a big drop against the Lao kip over the past several years as the US faced a domestic financial crisis. At the same time, the Lao economy saw rapid growth, making the value of the Lao kip appreciate against the dollar.
One of the main factors causing the value of the US dollar to rise is the ongoing recovery of the American economy, which is once again attracting local and foreign businesspeople to invest in the United States, Dr Mana said.
“The demand for US dollars is increasing as investors want the money to invest after seeing brighter investment opportunities in America,” he told Vientiane Times yesterday.
Dr Mana also said that the US central bank has a policy to curb money supply, which will cause the value of the US currency to increase.
According to international news agencies, it is now evident that the US economy is recovering from the financial crisis it experienced. One of the main indicators is the fact that the unemployment rate in America is falling and people are spending more money on houses and consumer goods.
Dr Mana, who is also the owner of a business consulting firm in Laos, said he expected the value of the US dollar to remain high into the future due to the continued recovery of the American economy.
He said the stronger dollar is good news for Lao exporting firms, which sell their goods in US currency but pay their expenses in kip.
Meanwhile the recovery of the US economy should also encourage more businesspeople to invest in Laos so as they can produce goods for the world's largest economy.
Laos has opened numerous special and specific economic zones in border areas, aiming to encourage foreign businesspeople to invest in the processing industry.
The country can supply raw materials to industries such as food processing. Laos is located in the middle of the Mekong basin and can act as a regional transit hub.
The nation has considerable potential in agriculture thanks to its abundance of fertile land and is also rich in natural resources such as minerals and hydropower.
Dr Mana said the rising value of the US dollar would not pose many challenges for Laos with regards to inflation control as Laos does not import goods from America. Most of the country's consumer goods come from neighbouring Thailand.
He also noted that the decreasing value of the Thai baht against the Lao kip will actually make the price of imported goods cheaper, which will play a positive role in keeping inflation under control.
vientiane times
