Vientiane (VNA) - The year-on-year inflation rateof Laos rose to 4.7 percent in July, highest level recorded since August lastyear, reported the Lao Statistics Bureau.
Fluctuating currency exchange rates are considered to be one of the maindrivers of inflation in Laos. Strong demand for foreign currencies, notably theThai baht and US dollar, means that businesses often rely on the parallelmarket to buy the foreign currencies they need to import goods.
However, the gap between the official and parallel markets is widening, withthe kip continuing to depreciate in June and July despite the government’smeasures to deal with the issue.
Governor for the Bank of Laos Sonexay Sitphaxay was quoted by local media assaying at the National Assembly that the gap in the kip/US dollar exchange ratebetween commercial banks and the parallel market had widened by as much as 22.1percent in July.
Sonexay said the increasing difference in these exchange rates was linked tothe rising demand for foreign currencies to meet the trade deficit and repaydebts owed to foreign countries amid the COVID-19 pandemic.
In July, Laos registered a record trade deficit of 99 million USD, up from 62million USD recorded in June, according to the Laos’ Ministry of Industry andCommerce.
The depreciation of the kip has impacted on imported products and resulted inrising production costs as well as driving up the cost of living in Laos.
In July, the cost of food and non-alcoholic beverages surged by 4.44 percentyear-on-year, and 1.10 percent month-on-month. Meanwhile, costs in thecommunication and transport category rose by 0.92 percent month-on-month and6.78 percent year-on-year.
At the same time, prices in the restaurant and hotel category went up by 2.19percent month-on-month and 4.42 percent year-on-year due to the rising cost ofcooked food./.
Fluctuating currency exchange rates are considered to be one of the maindrivers of inflation in Laos. Strong demand for foreign currencies, notably theThai baht and US dollar, means that businesses often rely on the parallelmarket to buy the foreign currencies they need to import goods.
However, the gap between the official and parallel markets is widening, withthe kip continuing to depreciate in June and July despite the government’smeasures to deal with the issue.
Governor for the Bank of Laos Sonexay Sitphaxay was quoted by local media assaying at the National Assembly that the gap in the kip/US dollar exchange ratebetween commercial banks and the parallel market had widened by as much as 22.1percent in July.
Sonexay said the increasing difference in these exchange rates was linked tothe rising demand for foreign currencies to meet the trade deficit and repaydebts owed to foreign countries amid the COVID-19 pandemic.
In July, Laos registered a record trade deficit of 99 million USD, up from 62million USD recorded in June, according to the Laos’ Ministry of Industry andCommerce.
The depreciation of the kip has impacted on imported products and resulted inrising production costs as well as driving up the cost of living in Laos.
In July, the cost of food and non-alcoholic beverages surged by 4.44 percentyear-on-year, and 1.10 percent month-on-month. Meanwhile, costs in thecommunication and transport category rose by 0.92 percent month-on-month and6.78 percent year-on-year.
At the same time, prices in the restaurant and hotel category went up by 2.19percent month-on-month and 4.42 percent year-on-year due to the rising cost ofcooked food./.
VNA
