Bank of Laos Tightens Regulations on Currency Exchange Business
The Bank of the Lao PDR has drafted a new administrative regulation intended to regulate currency exchange businesses following the depreciation of the Lao kip against foreign currencies.
The Bank of the Lao PDR (BOL) made a commitment at the latest National Assembly session to try to maintain the value of the Lao kip against major international currencies within a five percent range.
BOL Governor, Mr. Sonexay Sitphaxay, signed the bank’s Decision on Currency Business on 2 July as the kip continues to depreciate against the Thai baht and US dollar.
Under the new decision on currency exchanges, individuals and legal entities who wish to operate a currency exchange business must first obtain the proper license from the central bank.
Lao citizens are entitled to operate an exchange business, however other entities are only eligible if they already operate a business related to tourism and hospitality, according to the Decision.
The Decision strictly prohibits the exchange of foreign currency at unregistered locations or at rates that are not compliant with rates determined by BOL.
Offenders risk heavy penalties or closure.
Exchange rates must be clearly displayed so that consumers and bank officials can easily identify the daily rate and inspect fluctuation.
The government identified a widening gap between the official and market rates at the end of the cabinet’s monthly meeting in August last year, saying the increasing gap is having a negative impact on the price of consumer goods in Laos.
The need to tighten the management of currency exchange rates came following a warning from a senior government official that unregistered currency exchange services that violate currency regulations must be punished.