The riel appreciated slightly against the greenback over the past few weeks in comparison with the end of October, thanks to an improvement in economic activity and increased demand for local currency during the harvest season.
A banker and an economist also said the rise in demand for the riel was reflective of an increase in trust by the Cambodian population, as well as an improvement in tax collection, which is billed in the local currency.
According to the daily commodities report from the Ministry of Commerce, the riel appreciated more than one per cent to 3,998 riel to the US dollar in comparison with 4,042 at the end of October.
Rath Yumeng, the head of treasury at Acleda Bank, told the Post yesterday the demand for riel in November had increased with the onset of the harvest season.
The expansion of Cambodia’s economy had also helped, Yumeng said.
“I see that this month, the demand for riel has been high during the harvest season, as the rural population prefers to use riel when they sell their products,” he said.
Yumeng also noted improvements in tax collection, resulting in an increased absorption of the local currency from the market.
Chan Sophal, president of the Cambodia Economic Association (CEA), echoed Rath Yumeng’s comments, saying the improvement in Cambodia’s economy — particularly the rural sector — had been the main contributor to the appreciation of the riel.
The rise of the local currency was contributing to building the economy and ran along with the strengthening of monetary policy by the National Bank of Cambodia (NBC) on the promotion of using the local currency, Sophal said.
“I have noticed the trend of using local currency is on the rise. It emphasises Cambodians’ increased confidence in the riel — and that’s a good thing,” he said.
Yumeng also made the point that the banks’ promotion of deposits in riel with a high interest rate was another factor contributing to the currency’s appreciation.
“The total of our riel deposits is increasing,” he said. “Riel now account for more than 10 per cent of the total deposits taken.
“Previously, it was less than 10 per cent.”
The majority of Cambodians predominantly use riel, but the NBC’s statistics show more than 90 per cent of transactions conducted in Cambodia are in US dollars.
According to an NBC survey from 2010, 37 per cent of Cambodians receive their income in riel, 27.5 per cent in dollars and 33 per cent in multiple currencies.
About 2.2 per cent of Cambodians use Thai baht, while 0.3 per cent used Vietnamese dong.
Seventy per cent of Phnom Penh respondents operate solely in dollars, compared with six per cent of respondents in Battambang, the statistics show.
To contact the reporter on this story: May Kunmakara at firstname.lastname@example.org