VIENTAINE, April 23 (Xinhua) — The Bank of the Lao PDR has replenished its supply of foreign reserves in efforts to secure supply of foreign currency for importers, local press reported Wednesday.
Speaking at a meeting of government officials and business leaders presided over by Prime Minister Thongsing Thammavong, central bank governor Somphao Phaysith said that the bank was able to increase its foreign reserve to meet importers’ demand. “The current foreign reserve is now able to secure imports for about six to seven months,”Somphao was quoted by state-run Vientiane Times as saying.
The announcement follows a report by the World Bank which warned that Laos was facing historically low foreign reserves. The report said that the country’s foreign reserves had fallen to the lowest point in a decade and would only be able to sustain the import of goods for 1.3 months.
Last December, the central bank announced that it would not provide foreign currency loans to companies which did not generate foreign currency as a means to shore up the reserve.
Economists have praised the move saying that the higher level of foreign reserves will help to stabilize the exchange rate for the Lao kip. It is hoped that the measures will maintain strong business performance and investor confidence in the country.
In late 2013, several commercial banks in Laos were unable to allow their customers to exchange more than 2,000 Thai baht ( approximately 62 U.S. dollars) sparking panic amongst businesses who deal with Thai customers.
In 1997, the Lao kip saw a huge devaluation against Thai baht and U.S. dollar leading to a loss of confidence in depositing and saving money in Lao kip.