VIENTIANE, Aug. 30 (Xinhua) -- Lao cabinet has named the management of currency exchange as one of its top priorities in the coming months, as the gap between the official and market exchange rates widens.
Lao government urged the Lao Central Bank and relevant sectors to tighten the management of currency exchange, according to a media release issued at the end of Lao cabinet's monthly meeting.
The increasing exchange rates gap is having a negative impact on the price of consumer goods due to the fact that most goods sold in Laos are imported, local daily Vientiane Times reported on Friday.
On Thursday, Lao commercial bank Banque Pour Le commerce Exterieur Lao (BCEL), one of the largest commercial banks in Laos, advertised an exchange rate for the kip and U.S. dollar of 8,756 kip per dollar, while the exchange rate for the kip and Thai baht was 290 kip per baht.
This official bank rate is significantly different to the rates offered on the street. On Thursday, many currency exchange outlets were selling one U.S. dollar for about 9,000 kip, and Thai baht for about 300 kip, said the report.
Many people said they were finding it difficult to change money at banks, which sell currency at the official rate, because many banks limit the amount of money a person can change. This restriction forced them to change money at smaller currency exchange outlets, which lowers the value of the kip.
The depreciation of the kip against the baht and U.S. dollar is driving up the price of consumer goods in Lao capital Vientiane.
A vendor in local Lao market said she had increased the price of her goods by 1 to 5 percent to compensate for the depreciation of the kip against the baht, adding that this was unavoidable because she had to continue to make a profit.
The July inflation rate indicated that the Consumer Price Index for imported goods saw an increase of 0.17 percent compared to the previous month and an increase of 1.49 percent compared to the same period in 2018.
Lao economists say one of the best measures to counter the effects of depreciation is to boost domestic productivity. More Lao-made goods on sale in local markets would result in a fall in demand for foreign currencies.
With a view to enhancing domestic productivity, Lao government has set up a committee to study measures that could encourage domestic firms to produce goods for the local market.
