Overview
The Laotian Kip is the official currency of Laos. It is issued and managed by the Bank of the Lao People's Democratic Republic. The Kip floats on foreign exchange markets and serves as the currency for a landlocked Southeast Asian nation, a post-colonial communist state with limited economic development and significant remittance dependency.
Etymology & History
The word "Kip" derives from the Thai "baht," reflecting regional currency traditions. The Laotian Kip was introduced in 1952 following Laos's independence from France (1953), replacing the French Indochinese Piastre. The currency was reintroduced in 1955 following a brief unification experiment and has remained the currency through Laos's communist revolution (1975).
Laos's monetary history includes French colonial currencies, transitional currencies (1952–1955), and the modern Laotian Kip (1955–present).
Timeline of Key Events
| Year | Event |
|---|---|
| 1952 | Laotian Kip introduced; replaces Piastre |
| 1964–1973 | Indochina War (Laos as sideshow); US bombing campaign; secret war |
| 1975 | Communist Pathet Lao victory; Laos becomes People's Democratic Republic |
| 1986 | Economic liberalization ("New Economic Mechanism"); market reforms begin |
| 2000s | WTO accession progress; trade integration; remittance inflows |
| 2022–present | Chinese Belt and Road debt; currency depreciation; inflation pressures |
Current Denominations
Coins in circulation: 10, 20, 50 Atts; 1, 5, 10, 20, 50 Kips (limited use)
Banknotes in circulation: 500, 1,000, 2,000, 5,000, 10,000, 20,000, 50,000, 100,000 Kips (high denominations reflect inflation)
Withdrawn: None actively withdrawn; older banknotes in circulation
Exchange Rate Regime
Free float with Bank of Lao intervention to manage volatility; historically influenced by Thai Baht movements.
Convertibility
- Current account: Partially convertible
- Capital account: Heavily restricted; capital controls during volatility
Monetary Policy Framework
Bank of Lao targets inflation and currency stability; monetary policy frequently pressured by fiscal deficits and external commodity shocks.
Notable Characteristics
- Landlocked nation: Geographic isolation; dependent on Thailand and Vietnam for trade routes
- Communist one-party rule: Lao People's Revolutionary Party (LPRP) monopoly since 1975; limited political pluralism
- Indochina War legacy: US bombing campaign (1964–1973); 2+ million tons of ordnance; unexploded ordnances (UXO) remain; cluster munitions
- Mekong River economy: Hydropower development; fish stocks; navigation; shared with Thailand, Vietnam, Cambodia
- Remittance-dependent: Diaspora (Thailand, US, France) provides significant family income; education abroad migration
- Chinese Belt and Road debt: High-speed rail, dams, roads; unsustainable debt levels; asset seizure risks
- Hydropower export: Mekong dams; electricity exports to Thailand, Vietnam; environmental controversy
- Poverty persistence: One of Southeast Asia's poorest; limited industrial base; agrarian dependency; infrastructure gaps
- Tourism potential: Luang Prabang UNESCO heritage site; Mekong cruises; tourism infrastructure development