Lao Kip (LAK)

What Is the Lao Kip (LAK)

The term Lao kip (LAK) refers to the official national currency of Lao People's Democratic Republic or Laos. It is abbreviated as LAK in the foreign exchange market and is represented by the symbols ₭ and ₭N. The currency is maintained by Laos's central bank, Bank of the Lao P.D.R. Banknotes range in value from ₭1 to ₭100,000. One kip is divided into 100 att. Coins and smaller bills are no longer used in the country because of high inflation.

Key Takeaways

  • The Lao kip is the official national currency of Lao People's Democratic Republic or Laos.
  • The kip became the official currency in 1952 after Laos declared independence from France.
  • The kip is maintained by the country's central bank, Bank of the Lao P.D.R.
  • It ranges in value from 1 to 100,000, although banknotes below 1,000 kip are no longer used.
  • One kip was divided into 100 att, coins which are now worthless because of high inflation.

Understanding the Lao Kip (LAK)

The Lao kip replaced the Indochinese piastre in 1945, four years before Laos officially gained independence from France. This version was called the Free Lao kip. It became the official currency in 1952.

The Bank of the Lao P.D.R., the country's central bank, is responsible for the country's economic and monetary policy, as well as maintaining the value and supply of the kip. Banknotes were originally printed in France, but production moved to China in the late 1970s.

Banknotes circulate in the following denominations: 1, 5, 10, 20, 50, 100, 500, 1,000, 2,000, 5,000, 10,000, 20,000, 50,000, and 100,000 kip. As mentioned above, one kip is broken up into 100 att. Coins were minted in 10, 20, and 50 at but high inflation made banknote denominations under 1,000 kip and coins worthless.

The kip floats freely against other currencies and is not pegged to any other currency. Although the country runs on a cash economy, travelers can use credit cards in major cities at large establishments, such as hotels and restaurants. They can also use the U.S. dollar, which is commonly used in cash transactions. As of Aug. 2, 2022, US$1 was equal to ₭15,080.

If you travel to Laos, you can bring up to $2,000 in U.S. currency into the country without declaring it but you cannot import Lao kip. If you bring in more than $2,000 of U.S. currency, you must declare it to customs before and after your arrival.

Special Considerations

Laos is located in Southeast Asia and is bordered by China, Vietnam, Cambodia, Thailand, and Myanmar. It was colonized by France in 1893 but gained independence as a monarchy in 1954. The official language of the country is Lao. However, the country is home to a large population of people who speak French, English, and Vietnamese.

Laos began to develop its economy by opening the country up to tourism after the fall of the Soviet Union ushered in economic reforms. This industry is pivotal to the government, as it helps reduce public debt and decreases dependence on foreign aid. In fact, the travel and tourism industry accounted for over 10% of the country's gross domestic product (GDP) in 2019. That number dropped to 5.3% because of the COVID-19 pandemic in 2020 and saw a minor increase in 2021 to 6.1%.

The country's major trading partners are China, Thailand, Vietnam, India, and Japan. Top exports include copper and copper cathodes, bananas, video recording magnets, and non-alcoholic beverages. The country has an abundance of natural resources, such as minerals, oil, and gas, as well as water, which allows it to export hydroelectric power.

As mentioned above, the country runs largely on a cash economy. Those who live in rural areas, though, tend to live without cash and operate on a barter system. They also tend to hold their wealth in other resources, such as land and gold. Laos' GDP was $18.83 billion in 2021. The country's economy grew 2.5% in 2021 while inflation registered 3.8%.

Article Sources
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