NBC to off-load additional US$7 million to stabilise struggling local currency

AN additional US$7 million will be put up for sale by the National Bank of Cambodia (NBC) this month in the organisation’s latest attempt to stablilse the value of the riel, it was announced Friday.

Banks, private companies and money lenders will be able to use riel to buy seven separate lots of $1 million from NBC.

Bidding on the first sale begins today with the last sell-off scheduled for June 30, according to an announcement signed by the bank’s Secretary General Sum Saniseth and released Friday.

The intervention, aimed at taking supplies of local currency out of the real economy thereby increasing demand for the devalued riel, follows the sale of $10 million carried out by NBC over the last three weeks.

So far, its attempt to revalue the riel has had a small but positive affect.

According to Ly Hour Exchange, the largest money changer in Phnom Penh, one greenback was worth 4,252 riels Sunday, a slight improvement on the 4,265 riels per dollar recorded a week earlier.

This strengthening interrupts a slide that has seen the riel depreciate to record lows.

Its value has fallen 1.47 percent over the past two months, from 4,190 riels per US dollar in mid-April, according to Ly Hour.

The riel “has gradually begun to appreciate after the central bank’s interventions”, said Sieng Lim, the owner of Ly Hour Exchange, on Sunday.

She believes the riel will stabilise when the harvest season begins in September.

It is the NBC’s policy to intervene when the riel depreciates to more than 4,200 riels per US dollar by dipping into its foreign reserves to buy in riel currency.

As of May, according to NBC data, the bank held $2.5 billion worth of foreign reserves.

According to last year’s annual report, in 2009 the NBC put 32 lots of currency worth $54 million on the market to ensure that the riel remained valued at between 4,000 and 4,200 per US dollar.

Cambodia has an estimated $500 million worth of riels in circulation.

Last week, Kang Chandararot, president of Cambodia Institute for Development Study, praised NBC’s interventions.

He said that the riel’s depreciation was the result of a strengthening US dollar – which has been affected by the weakened euro – and a reduced inflow of dollars into Cambodia through trade and investment.

Tal Nay Im, director general of the NBC, and Secretary Genearl Sum Saniseth did not reply to repeated calls for comment Sunday.