The share of riel in circulation in the Kingdom grew by about 33 per cent year-on-year by last year’s end as deposits in riel increased by 37 per cent, said the National Bank of Cambodia (NBC) 2019 Review and 2020 Outlook report.
The report noted a steady rise in demand for the local currency, with deposit dollarisation ratio dropping to 82.9 per cent last year from 2018’s 84.8 per cent.
Speaking at the closing ceremony of the report’s launch on Friday, NBC governor Chea Chanto said promoting the usage of the riel is crucial for the Cambodian economy.
As a result of the central bank’s efforts, he said, the level of dollarisation decreased slightly last year. However, dollarisation remains high, and it requires the introduction of a more prudent policy, he said.
“I would like to urge all departments to continue to regularly implement measures to promote usage of the riel and strengthen new and existing measures, depending on the situation,” he said.
The NBC has taken measures to promote usage of the riel, such as providing riel liquidity to the public via riel loans and simultaneously to banks via riel-denominated Liquidity-Providing Collateralised Operations.
In November 2017, the central bank announced that local banks and microfinance institutions (MFIs) can issue corporate bonds or list equity securities on the nascent Cambodian stock market. Hattha Kaksekar Limited issued riel-denominated corporate bonds the following year.
In December 2016, it issued a prakas instructing all banks and MFIs to hold a minimum 10 per cent of their loan portfolio in riel.
In April that year, the NBC launched the Fast and Secure Transfer (Fast) payment system to make payment transactions and fund transfers in the local currency instantaneously from one commercial bank or microfinance deposit-taking institution to another.
It has also worked with the Ministry of Commerce in requiring all businesses to post the prices of their goods and services in the local currency.
Chanto said: “To continue to support the government’s policy to promote sustainable economic growth and reduce poverty, the National Bank of Cambodia will continue to promote efficiency and financial policy, and contribute to price stability and macroeconomic stability.”
The NBC’s Issue Department director Chhim Chankosal said printing of riel notes increased 50.4 per cent last year compared to 2018, especially for larger denominations such as 100,000 (which tripled) and 50,000 (which doubled).
Last year, the exchange rate was relatively stable, with an average of 4,065 riel per greenback compared to 4,051 riel in 2018.
The context of the value of the riel has always been subject to slight fluctuations in seasonality, especially the increase in the demand for taxes paid in riel, the NBC said.