Lao Kip (LAK)

What Is the Lao Kip (LAK)

The term Lao kip refers to the official national currency of Laos. The kip was introduced between 1945 and 1946, and again in 1952 when it officially replaced the French Indochinese piastre. The kip 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. As of Feb. 28, 2021, $1 (USD) was equal to about 9,335 LAK.

Understanding the Lao Kip

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, 100,000 kip. As mentioned above, one kip is broken up into 100 att. Coins were minted in 10, 20, 50 att. 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. 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.

Travelers who bring in more than $2,000 worth of U.S. currency must declare it to customs before and after they arrive in Laos.

Special Considerations

Laos is located in Southeast Asia and is bordered by China, Vietnam, Cambodia, Thailand, and Myanmar. It was colonized by France between 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 roughly 14% of the country's gross domestic product (GDP) in 2017.

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. The Laotian economy grew 4.65% in 2019, while inflation registered 3.32%.