Lao kip suffers free fall and then climbs freely

(KPL) The Bank of the Lao PDR said it would not take any step to depreciate the value of the Lao kip even though it has been appreciating over the past few years.
The bank said the kip has been trending upwards against the greenback or US dollar and Thai baht and this is an advantage to the Lao businessmen who are importing goods though it works against the Lao exporters who are consigning their goods overseas.
In 2008 the Lao kip appreciated as much as 9.52 per cent and 4.96 per cent against the geenback and the Thai baht respectively.
Some people complained that although the kip is strengthening but the prices of the consumption goods is high and exporters have to bear the burden of the high cost of production and in connection with this, Mr. Khamphout Sitthirath, the Deputy Head of the Foreign Currency Policy Department, the Bank of the Lao PDR, issued a statement. “There is no need for the Bank of the Lao PDR to adjust the value of the kip as its current price is the result of a market-driven currency management policy.”
The strength of the Lao kip will enable the country to import more and this will make the public have more confidence on the Lao kip, which is in line with the government’s policy to promote the usage of the kip, Mr. Khamphout was quoted as saying.
“The Lao kip’s strength will also enable the government to clear more of its debts as it will be spending less than in the past,” the BOL governor added.
The Lao kip capitulated during the Asian financial crisis, commencing in 1997, suffering a free fall from 2,000 kip to 10,000 kip to the dollar and this triggered a free climb inflation in Laos.
According to the Lao bank, Banque pour le Commerce Lao, the exchange rates of the Lao kip against two currencies, US dollar and Thai baht on 6 January 2009 weres 8,464 kip and 242.36 kip respectively and about year ago, on 31 December 2007 the exchange rates were 9,324 kip per dollar and 277.85 kip for one Thai baht.

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