Logo of Phnom Penh Post newspaper Phnom Penh Post - Dollars on sale to boost the riel

Dollars on sale to boost the riel

Dollars on sale to boost the riel

THE National Bank of Cambodia (NBC) has put out US$4 million for sale in a bid to stabilise the riel, which depreciated to a three-year low last week.

According to an NBC announcement, signed by Director General Tal Nay Im late last week, the bank is inviting bids from commercial banks, licenced money changers and companies to use riel to purchase four separate lots of $1 million.

NBC says it hopes that the sale will reduce the number of riel notes in circulation, thereby creating artificial demand for the currency and bolstering its worth.

“When less riel currency is on the markets, it will appreciate in value,” Tal Nay Im said on Sunday.

The first lot was sold on Friday to Tea Kim Hak Exhange – which offered a high bid of 4,228 riel per dollar – and further bids are expected to be received today, Wednesday and Friday at NBC’s headquarters in Phnom Penh.

The riel currency has lost 1.14 percent of its value in the past month. The exchange rate in Phnom Penh was recorded at 4,238 riel per US dollar on Sunday, from only 4,190 riel a month before, according data from Ly Hour, the capital’s largest money exchange.

According to statistics compiled by the Economic Intelligence Unit, the research arm of The Economist magazine, coupled with Post estimates, the riel’s average worth this month was the lowest for at least three years.

NBC’s director general said the reason for the excess of riel on the market, and thus for the currency’s poor performance, was seasonal.

A lack of agricultural transactions, which peak during harvest time, and tax payments, which are made in local currency, at this time of year has caused the currency to depreciate, she said.

Generally, the national bank of Cambodia (NBC) intervenes when the riel depreciates to a rate of more than 4,200 per US dollar. The last time such action was carried out was in late August of last year.

Tal Nay Im said last week that the bank had been watching exchange rates every day as the dollar has become stronger, a trend analysts have attributed to the fact that investors are reverting to safe assets because of European financial concerns.

Money exchangers said Sunday that they welcomed NBC’s intervention.

Sieng Lim, owner of Ly Hour Exchange, said Sunday that she always bids for dollar sell-offs. To be authorised to bid, she said, an applicant must file a deposit of 420 million riels (US$99,103) at the NBC.

“We joined the bidding. This did not mean we will gain a profit from it, because the exchange rate fluctuates irregularly, but we have to help the government to stabilise the riel,” she said.

Sieng Lim said that six or seven large exchangers had bid for the NBC’s dollars.

Cheam Teang, executive vice president chief of treasury and international cooperation officer at ACLEDA Bank, said Sunday that the bank had no plans to join the currency bidding.

But he added that the NBC normally uses its foreign reserves for such sales.

“It’s not difficult for the government to stabilise the riel, as its [NBC] foreign reserves are too high,” he said.

According to its own data, the NBC held $2.8 billion worth of foreign reserves as of the end of the first quarter of 2010.

Riel currency is used for about 10 percent of transactions in Cambodia. The rest are carried out in US dollars.

MOST VIEWED

  • Two luxury hotels latest quarantine options for inbound travellers

    The Inter-Ministerial Committee to Combat Covid-19 has designated two luxury hotels as alternative quarantine options for travellers who wish to enter Cambodia through Phnom Penh International Airport – Sokha Phnom Penh Hotel & Residence and the Courtyard by Marriott Phnom Penh. In a notice detailing guidelines issued

  • Visa A holders get to quarantine at Himawari Hotel

    The Ministry of Health has permitted foreign diplomats, UN and International NGO officials to undergo quarantine at Himawari Hotel in the capital in case they do not have a separate place suitable for this purpose, but the government would not be responsible for the expenses.

  • Baby saved as mother is lost to Covid

    Newborn baby Neth David has had a rough start in the world. His mother, Vong Daneth, was seven months pregnant when she contracted a severe case of Covid-19. When it became clear to her doctors that she would not survive, they performed a cesarean section

  • Jabs for kids bring hope for school reopenings

    Cambodia is tentatively planning to reopen schools – at least at the secondary level – when the vaccination of children aged 12-17 is completed, even though daily transmissions and deaths in other age groups remain high. Schools across the country have been suspended since March 20, one month

  • Governor: Covid subsides in capital

    Phnom Penh municipal governor Khuong Sreng said the Covid-19 situation in the capital’s 14 districts has eased, with only two districts still recording a high number of infections. “Transmission cases in all districts are dropping, though they are relatively higher Meanchey and Por Sen Chey.

  • Hun Sen: Get 12-17 age group ready for Covid jabs

    Prime Minister Hun Sen has told parents of children aged 12-17 in Phnom Penh and the provinces of Kandal and Preah Sihanouk to get them ready for vaccinations soon. “There is a need to vaccinate children and youths aged 12 to 17. According to the statistics provided