Currency controls driving up price of imported goods
Currency controls driving up price of imported goods
The prices of imported products being distributed in Laos have increased recently as the government attempts to control foreign currency exchange rates.
The move aims to promote kip currency expenditure within the country and to prevent people from exchanging kip to buy foreign currencies from banks every day.
However, many people have observed that these measures will impact the price of goods on the domestic market and the value of foreign currencies will get stronger because most products in Laos are imported.
A trader in Naxay village, Vientiane, said the prices in her shop had gone up slightly as she has to pay more kip to buy Thai baht, which is needed to purchase imported products, especially on the black market.
A few months ago a kilogramme of sugar in Vientiane cost 5,000 kip to 6,000 kip in retail shops, but now the price is 7,000 to 8,000 kip.
Instant noodles were 30,000 kip per carton but are now at least 32,000 kip.
Soft drinks were previously about 80,000 kip per case but are 84,600 kip this week.
Cultured milk was about 80,000 kip per carton and has climbed to 83,835 kip since last week.
But economist Dr Mana Southichack said he couldn't necessarily say that the government's foreign currency exchange controls would push prices up.
He said the price of imported products depended on the amount of foreign currency in the country.
For example, if there was less foreign currency in banks it would push up the amount of kip needed to buy foreign currencies. Of course, this would drive up the price of imported goods.
However, it also depended on the black market. If there were still large amounts of foreign currencies in store, the rate of kip to exchange foreign currencies would remain lower.
Currently, Banque pour le Commerce Exterieur Lao Public (BCEL) is only allowing customers to exchange currencies once a week and at a maximum of 5 million kip per person.
On the other hand, customers can exchange foreign currencies for kip at any time in unlimited amounts, according to the bank.
However, several banks are currently not selling foreign currencies in exchange for kip.
