Phnom Penh: The Bank of the Lao PDR (BOL) will impose ceilings on foreign currency deposit and lending rates to promote the use of the Lao kip and strengthen economic stability. Acting Governor Ms. Vathana Dalaloy announced the measure during her address at the 9th session of the 9th National Assembly.

According to Lao News Agency, Ms. Dalaloy emphasized the central bank’s commitment to “coordinating closely with the government to implement tighter monetary policies,” ensuring money supply aligns with economic conditions. Key measures include introducing limits on foreign currency deposit and loan interest rates to curb dollarization and incentivize kip usage.

The BOL will continue managing exchange rates through market mechanisms while intensifying crackdowns on informal currency exchanges. Enhancements to the Lao Foreign Exchange System (LFX) aim to improve transparency and liquidity in foreign currency transactions.

Exporters and investors will be encouraged to repatriate earnings and conduct foreign e
xchange transactions through official banking channels. Concurrently, the government will revise tax policies to reduce forex-related burdens on exporters and foreign direct investment (FDI) enterprises, offering incentives for kip-based transactions.

Monitoring of export/FDI businesses and corporate forex transactions will be strengthened to ensure compliance with repatriation rules and channel more foreign exchange through the formal banking system.

These initiatives respond to sustained depreciation pressures on the kip, driven by high inflation and acute foreign currency shortages. The BOL aims to reduce reliance on foreign currencies and stabilize monetary policy by tightening forex controls and promoting the national currency.

The new regulatory framework is expected to be finalized in the coming months, with full implementation targeted by late 2025. Businesses and financial institutions are advised to prepare for the upcoming policy changes.