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Laos
Index
In June 1976, the "liberation kip" replaced the old kip
at a
rate of twenty to one. Three years later, following a
massive
collapse of the value of the currency, a "new kip," or
National
Bank kip, was introduced, worth 100 liberation kip, and
the
official exchange rate was fixed at thirty-five new kip to
one
United States dollar. A system of multiple exchange rates
has been
implemented in an effort to control inflation; different
rates are
applied to the transactions of businessmen, tourists,
senders of
remittances, and aid agencies. In September 1987, however,
with a
devaluation of the commercial rate of roughly 900 percent
relative
to the United States dollar, the multiple rates were
abandoned in
favor of a single floating exchange rate applicable to all
transactions.
The exchange rate is adjusted periodically relative to
the
dollar. In 1988 it stabilized at about K340 to the dollar,
in part
because the government stopped accepting United States
dollars and
Thai baht in payment for commercial or customs taxes, thus
reducing
holdings of kip. By late 1989, the kip had been devalued
by 100
percent--relative to the 1987 rate--where it remained
stable at
about K700 to the dollar through 1992. The exchange rate
was K721
to the dollar in June 1994--in part because of the
government's
decision to allow the free exchange of hard currencies.
In September 1990, Decree 53 ordered that all
transactions
within the country be conducted exclusively in kip; in
practice,
however, foreign currencies remain in daily use because
consumers
do not have enough confidence in their own currency. The
kip, Thai
baht, and United States dollar are used interchangeably.
Under
Decree 16, state-owned enterprises and private enterprises
are
allowed to maintain accounts in both kip and foreign
exchange.
Data as of July 1994
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