Laos tries to stabilise exchange rates !!! - Samakomlao Main

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TOPIC: Laos tries to stabilise exchange rates !!!

samakomlao

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Date: Jul 23, 2007

Laos tries to stabilise exchange rates !!!	Permalink

The Bank of the Lao PDR, the central bank of Laos, is trying to stabilise the exchange rate in the country as much as possible, hoping for a rate fluctuation this year of no more than 5 per cent. The bank governor, Phouphet Khamphounvong, said: “The central bank will control the exchange rates in the country, and will not allow the Lao kip to strengthen against the US dollar or weaken against Thai baht over 5 per cent.”In the first six months, the Lao kip was 0.99 per cent stronger against the US dollar. In June this year one US dollar was worth 9,599 kip, down from 9,695 kip of December last year. Currently, the Lao kip is quickly weakening against Thai baht, from the beginning of July up until last week the kip has continued to lose value against the baht, by about 2.8 per cent. The exchange rate was 279 kip per baht in June 2, by June 16 the rate had fallen down to 287 kip per baht. In the first half of 2007, inflation hovered at around 4.25 per cent, stabilising in June at 3.5 per cent. Phouphet said inflation in June this year reached the lowest in several years, thanks to the many investment projects. He explained that the Lao kip weakened against the baht because the baht had strengthened against the US dollar very fast. Just last week Thailand saw the baht strengthening from 34 baht per dollar to 33 baht per dollar. The Thai currency has consistently remained the strongest in the region for more than 10 years. When Laos imports products and services from Thailand, traders now have to spend more money to buy Thai baht, making various products in Laos more expensive. Another issue for a rapidly increasing exchange rate is illegal traders who take this opportunity to make gains from shifts in currency values. This puts increased demand for baht on the black market. Traders can also get away with selling their products at more expensive prices to protect themselves against the risk that the baht will continue to rise. Now the government is looking for ways to control the situation. The central bank has tried to ensure the exchange rate will not impact on the price of consumer products in the markets. Phouphet said the bank will continue selling Thai baht through the commercial bank until the Thai currency stabilises, or the company can buy Thai baht from the central bank directly; however, traders will need official import documents to do this. He said the bank will try to watch the currency rates closely, to ensure that the exchange rate in the commercial bank and other financial institution is reasonable. He said a stronger baht is an advantage for entrepreneurs who export goods to Thailand , and other countries; with some entrepreneurs able to earn more during this time. Because the price of products imported from Thailand is likely to increase, he advised people to buy local products or imported products from other neighbouring countries which are cheaper than Thai products. Source: http://www.asianewsnet.net/biz.php?aid=11186 -- Edited by samakomlao at 05:33, 2007-07-23 __________________ Make yourself visible, signup at samakomlao webboard. HERE

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