THE decision to list in riel will likely have little impact on the success of the Cambodia Securities Exchange, provided the NBC ensures a relatively stable riel-dollar exchange rate, according to a currency expert.

Late last week, the Securities and Exchange Commission of Cambodia announced that firms would be listed in riel only on the exchange, but would allow settlement in either the dollar or the riel for the first three years.

Asian Development Bank Office of Regional Economic Integration Principal Economist Jayant Menon wrote that the currency of settlement – rather than the currency of listing - was the “critical variable”.

“As long as the NBC [National Bank of Cambodia] can ensure a relatively stable riel-dollar exchange rate, which it has been doing particularly recently, then listing in riel should not matter much,” he said.

There could initially be some negative psychological impact on potential foreign investors, he said, but it should dissipate especially with the decision to leave open the currency for settlement.

“One should not overplay the role of the currency in ensuring the success or otherwise of the new exchange,” Menon wrote, adding other factors such as accounting standards, macro and political stability, and institutional development would be more important.

“A successful stock exchange will help the process of dedollarisation in the long run. The currency in which stock prices are quoted will hardly matter.”

Meanwhile, future actors in the stock exchange added their reaction to the decision yesterday. Kuy Bat, chairman at approved underwriter Phnom Penh Securities, said he supported the decision to use the riel for listings, but it could initially impact foreign investment on the exchange.

“It may have a slight impact for investors at the initial stage, but won’t impact the whole [economy],” he said. He added the decision to list in domestic currency was in line with most countries around the world.

Telecom Cambodia Director General Lao Saroeun said yesterday the firm followed the government’s lead regarding listing on the exchange.

“I agree with the government’s decision” he said.

While Phnom Penh Water Supply Authority assistant to director general Chea Visoth supported the government’s choice. “We can promote our local currency,” he said.