- Business

Central bank striving to stabilise local currency

The Bank of the Lao PDR (BOL) has issued a decision on foreign exchange rate setting to guide commercial banks in foreign currency trading.

The move allows commercial banks to have a more flexible margin in buying and selling foreign currencies, thereby stabilising the value of the local currency, the kip (LAK).

Specifically, commercial banks are allowed to set the exchange rate each day based on the reference rate set by the BOL.

Accordingly, the buying and selling rates of the LAK/USD of commercial banks must not differ by more than /-4.5% compared to the reference rate of the BOL.

The new decision does not limit the amplitude of the exchange rate between the LAK and the EUR , THB, CNY and other currencies, allowing for possible deviations from the BOL reference rate.

However, in all exchange rates, the gap between the buying and selling rates should not exceed 1%. Commercial banks are required to report the value of their foreign exchange transactions to the BOL on a daily basis, with separate reports for each currency.

In 2023, the Lao government has committed to further tighten the exchange rate based on a market-oriented mechanism but under state management.

Source: Lao News Agency