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Lao Businessmen Concern over Appreciated Kip Currency
Source: kplnet.net
Source Date: Monday, May 31, 2010
Focus: ICT for MDGs, Internet Governance
Country: Lao People's Democratic Republic
Created: Jun 07, 2010

(KPL) The business people have called on Lao government to urgently resolve the appreciation of Lao kip currency and high inflation rate that will impact their business and export. Some economists said that the Lao economy is under the control. According to Asian Development Bank, the Lao kip is strong a consequence of the increase of foreign direct investment (FDI) in Laos and weakening US dollar. Lao kip has been constantly strong if compared to the greenback earlier January this year. Deputy Head of Lao National Economic Research Institute, Dr Lyber Libuapao said that the strength of Lao kip does not mean the negative way. The weak greenback will be a good for imported country like Laos and will make the cost of import cheaper if it accounts on the US dollar.

However, the export of companies is also directly affected by the appreciation of kip currency and staff salary and management have to be spent on Lao kip. Even though the Lao kip is appreciated, it is still weak if compared to other trade partners currencies Thailand (Thai baht), he added. So Laos still has the positive point for the export because Thai baht is stronger than Lao kip, he said. However, the Lao Central Bank has determined a ceiling on the appreciation of kip currency to stay at 5 per cent. It means that kip currency has been capped on and it would not impact to the value of production, he said. The current economic environment has stability and exchange rate has a little bit change if compared to last year, he said. National economy was moving upward.

The ADB has forecasted that this year the inflation rate would stay at 5.6 per cent and 6 per cent next year. The this year inflation is higher last year due to the increase of petroleum price, world foodstuff, the increase of credit for business sector and the implementation of VAT early this year. However, the ADB and Lao Central Bank believed that the Lao economy will grow this year. They have stressed that the inflation rate will be appreciated again compared to the recent years that it needs the government to cope with the appreciation of kip currency.
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