The People’s Bank of China (PBOC)(Photo: Reuters)Hanoi (VNA) – Laos and China have agreed to facilitate the directexchange of the Lao kip (LAK) and the Chinese yuan (CNY) instead of having tomaking conversions through other currencies previously.
Vientiane Times said on January 13 that the Agreement on Bilateral LocalCurrency Cooperation between the Bank of the Lao PDR and the People’s Bank ofChina (PBOC) was inked on January 6 in Beijing, China, during Lao PrimeMinister Thongloun Sisoulith’s official visit to the country from January 5-9.
Under the deal, residents of Laos and China are allowed to use both LAK and CNYin trade and investment under both countries’ provisions of legislations.
The banks encourage commercial banks in the two nations to enhance cooperationand facilitate the exchange of LAK and CNY.
The PBOC said the agreement will help boost financial cooperation as well aspromote trade and investment between the two countries.
Meanwhile, a senior official from the Bank of the Lao PDR said the agreementwill support trade and investment activities between the two nations byreducing trade transaction costs.
Analysts say Laos may benefit from the Laos-China monetary cooperation, anddiversification of the currency exchange policy will drive down demand for theUSD, which is being used in Laos to import goods.
Currently, Laos is facing challenges in maintaining a stable exchange ratebetween the LAK and the USD, and LAK and THB. The value of the USD and THB hasincreased in the past few months.
To date, China is the largest foreign investor in Laos. Two-way trade has surgedsignificantly in the past few years, and the value is expected to grow furtherin the time ahead when the Laos - China railway becomes operational in 2021./.
VNA
