Should the government close currency exchange units to stabilise the value of the kip?

Many facebook users have posted comments about inflation and ways to tackle the problem of the weak kip. Most people urged the government to close currency exchange units so that banks had more control and were able to amass more foreign currency reserves. Now the Bank of the Lao PDR has taken steps to limit the operations of currency exchange units across the country, as part of efforts to stabilise the value of the kip. Vientiane Times asked around for people’s thoughts on this move.

Ms Tounkham Lattanavong, a resident of Xaythany district, Vientiane: I agree that privately-owned and independent currency exchange units should be banned, and people should be allowed to change money only at designated banks. At the very least, the government should set rules to control currency exchange rates. The regulations should be strictly enforced and anyone found breaking the rules should have their business stopped immediately. Everyone should do what they can to drive up the value of the kip, with financial transactions in Laos limited to kip only.

Ms Mone Singvongxay, a government official in Naxaithong district, Vientiane: I agree with the government’s decision to curb the operations of currency exchange units and ban them from changing money for organisations and companies. To ensure that banks have a larger slice of the pie and have more foreign currency reserves, their exchange rates should be the same as at currency exchange units. People who break the law should be penalised. Bank should have sufficient foreign currencies to meet the needs of the general public and businesses so that they aren’t forced to change money with illicit service providers, which enhances exchange rate disparities. 

Ms Noy, a resident of Vientiane: I don’t think it’s good that the government continues to allow currency exchange units to exist. I think this should be the sole preserve of banks, to prevent any problems. It’s all right to have external currency exchange units so long as they operate legally, but this is not always the case. It would also be good if the law and regulations in this regard were enforced effectively and fairly.

Ms Phannga, a government official in Xekong province: It’s true that the unfavourable currency exchange rates are affecting everyone. This is because some business operators use fluctuating exchange rates to their advantage, which is unfair and causes volatility in the market. I’d like the authorities to crack down on business operators who act illegally, to prevent people from being cheated. I also urge everyone involved in currency operations to stick to the rules. To counter exchange rate fluctuations, we should do everything we can to strengthen the kip and buy more Lao-made products than imported goods, as this would reduce the need for foreign currencies.

An economics lecturer at the National University of Laos: There are many reasons why the kip has fallen in value. As we all know, the global economic downturn and fuel shortage is affecting things here in Laos. I don’t think it’s necessary to ban privately-owned currency exchange units but they should strictly comply with the rules set by the central bank. Of course, those units that operate illegally should be closed down. The law must be brought to bear to protect business operators and ordinary people, and to stabilise the value of the kip. The government is trying to solve this problem, but it’s not something that can be done in a short period of time. It’s not just the duty of the government to solve the problem; we all have a responsibility to play a part in shoring up the value of the kip.

By Lamphone Pasanthong
(Latest Update June 23, 2022)