Logo of Phnom Penh Post newspaper Phnom Penh Post - Fears over new bank note

Fears over new bank note

Fears over new bank note

7 Beef seller

The new 100,000 riel banknote depicting the late King Father Norodom Sihanouk is not just a pretty historical token. It will also help inject much needed cash into the economy, according to the National Bank of Cambodia.

Although take-up will occur as older banknotes of other denominations deteriorate, the introduction of the new denomination will provide additional liquidity that is demanded by Cambodia’s rapid growth, NBC director-general Nguon Sokha said.

“It is an increase of liquidity based on the demand of the currency, for the increase in economic transactions,” Sokha said. “Absorption will be done gradually and injection will be done gradually, it is not simultaneous,” she said, adding that additional liquidity is injected over and above that which is absorbed.

Kang Chandararot, president of the Cambodian Institute for Development Study, is concerned that now is not the right time for increasing the liquidity volume in Cambodia. A strengthening dollar, “seasonal riel demand”, a lack of long-term growth and inflationary pressures from the Kingdom’s neighbours are all reasons increasing liquidity was “dangerous”, he said.

“So far the situation is not convenient to introduce new volume of liquidity into circulation,” he said.

“We need to be strict in our monetary policy, otherwise we just import inflation from those [neighbouring countries: China, Vietnam and Thailand] and it will abolish all our efforts in the past.”

Sokha did not anticipate any immediate inflationary or valuation impact and said the long-term plan was to encourage broader use of the local currency, moving away from the US dollar.

“Our cash strategy is to increase the use, not strengthen the value, but increase the use; the value needs to be maintained so that means there is stability in the exchange rate in order to maintain and promote the public confidence in the local currency” she said.

“We understand our situation and we give a lot of careful attention before we inject the money into the local economy, we aware that we don’t want to inflate the economy through this.”

Grant Knuckey, chief executive of ANZ Royal Bank also did not anticipate any great impact as the issuance he said was largely “symbolic”.

“In the case of Cambodia, as a physical cash society there can be more of an impact from introducing new notes, but even then it is marginal. I wouldn't expect any inflationary impacts, and indeed the NBC has control over notes and can remove other case from the system if need be,” he said.

Sokha did not have figures of the total value of the new denomination to be injected at hand.


  • US to ramp up sanctions after ‘flawed’ national polls

    At a press conference on Wednesday, the US State Department announced that it would expand visa sanctions on the Cambodian officials and individuals it deems responsible for “undermining democracy” in Cambodia. At the briefing, spokesperson Heather Nauert reiterated that the department regarded the July 29 elections

  • Final poll results confirm first single-party Assembly

    IN an unprecedented situation in Cambodian politics, the official results of the July 29 national elections have declared that the Cambodian People’s Party (CPP) will take all 125 seats in the National Assembly on the back of it receiving 76 per cent of the votes. The National

  • PM's Bodyguard commander hits back at US

    The commander of Prime Minister Hun Sen’s Bodyguard Unit (BGU) Hing Bun Heang on Sunday dismissed a short video clip that went viral on social media in which he says he is preparing for a war with the United States over its aggressiveness towards

  • Chinese influence to sweep Kingdom?

    Growing Cambodia-China ties have seen the latter’s influence sweep across the Kingdom through increased investments and tourism. The Asian giant has become the leading source of foreign funds in Cambodia, fuelling the construction sector with huge casino and hotel projects. Much of the growth