T HE value of the riel has risen in the first six months of the year on confidence in the government and its economic reforms, the central bank said.

The National Bank of Cambodia, in its latest Economic and Monetary Review released at the end of Septemer, also said the rate of inflation had eased over the same period.

"Over the first half of 1994, as the result of economic measures taken, coupled with rising confidence in the government, the riel appreciated, while prices have only increased slightly," the bank said in the report.

"During the first half of 1994 the parallel exchange rate fluctuated between 2,520 to 2,596 riel (against the dollar)," the bank said.

"The US dollar auction mechanism at the National Bank of Cambodia has facilitated the strengthening of the riel," it said.

Last year the Cambodian currency fluctuated wildly. At times it was as low as 4,000 riel to $1.

The central bank's dollar auctions were introduced late last year following a World Bank loan.

The monthly rate of inflation for July rose by 4.5 percent, compared with a 2.6 percent drop in June, largely on increases in prices of staples rice and fish but the annual rate of inflation was still on a downward trend, the bank said.

"On a year-on-year basis the rate of inflation decreased from 31.0 percent in December 1993 to 8.8 per cent in June 1994," the report said.