The Bank of the Lao PDR looks set to be in a strong position to secure sufficient supplies of US dollars for goods importers despite a rising demand for the currency in the country.
The central bank governor, Mr Somphao Phaysith announced at a cabinet meeting held in Vientiane last week that value of foreign reserves in the country had been growing over the past several months thanks to the imposition of an appropriate monetary policy.
Foreign reserves rose to US$994 million in August, which made the country able to secure the import of goods and services for more than 6 months, he said, adding that the central bank earlier expected that the reserves would secure imports for only 5 months.
In this fiscal year export values reached more than US$3.305 billion, equivalent to just 79.3 percent of the annual plan, while imports reached US$4.700 billion which met the annual plan, according to a report from the Ministry of Planning and Investment.
Officials said that most of the goods imported into the country were used for construction projects. This fiscal year Laos attracted 1,589 investment projects from both domestic and foreign private investors totalling US$2.899 billion or 23.192 trillion kip that exceeded what had been planned by 48 percent.
The announcement by the central bank governor over the rising foreign reserve value would ease worries of goods importers over the supply of foreign currencies in the country. Over the past few months, a crowd of people flocked to local commercial banks and their exchange service units to have their kip exchanged to US dollars.
The phenomenon caused wide speculation among the public that the central bank would face difficulties and challenges to supply enough foreign currency to meet market demand.
According to commercial bank officials, the Bank of the Lao PDR advised the commercial banks to supply foreign currency to ordinary people who need money to buy goods from foreign countries regularly. However everyone has the right to have 20 million kip per day exchanged.
The commercial banks also allowed their customers to withdraw money from their bank accounts using ATMs in foreign countries so that they can use the funds to buy goods and services while travelling abroad.
The value of the Lao kip saw an average drop of 1.02 percent against the US dollar but a 1.73 percent rise against the Thai baht over this fiscal year. At present the value of the national currency stands at 8,127 kip per US dollar and 228.85 kip per baht.
The central bank set up a reference exchange rate daily for the commercial banks in the country to follow. This effort aims to maintain control of fluctuations in exchange rates, which is one of the main conditions to maintain economic stability in the country.
Source: Vientiane Times