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Riel holds amid dollar dip

A woman sorts through stacks of Cambodian currency in Phnom Penh. Despite the surprising US election result last week, the riel held strong against the dollar in trading.
A woman sorts through stacks of Cambodian currency in Phnom Penh. Despite the surprising US election result last week, the riel held strong against the dollar in trading. Heng Chivoan

Riel holds amid dollar dip

It may be too early to say whether Prime Minister Hun Sen’s prediction that Donald Trump in the White House will be a boon for world peace was accurate, but as foreign exchange markets closed on Friday evening, it appeared to have done the Cambodian riel a favour.

On November 7, the eve of the US elections, one dollar bought 4,082 riel; by Friday evening, it had dropped in value against the riel by 2.2 percent, buying just 3,992.

In Channy, CEO of Acleda bank, said that he believed the tumble was related to America’s surprise election result.

“I think it is related to the election in the US, but the Cambodian riel is stable,” Channy said.

Of the two currencies, Channy believes Cambodia’s is the safer investment, something he said is reflected in the behaviour of the Kingdom’s financial institutions.

“Some financial institutions offer 7.75 to 9 percent interest [rates] on the riel, it means they trust the stability of the riel so they can offer higher interest rates,” Channy said, noting that most institutions offer an interest rate of just 6.5 percent for dollar investments.

Economist Mei Kalyan said that while he lacked sufficient data to offer a solid conclusion, the riel’s gains could be down to internal as well as external factors.

“There are two tendencies, one is US dollar [going down] because Mr Trump was elected and [the second] is the harvest season in Cambodia,” Channy said. “They need riel to buy agriculture products because the rural areas work in riel, not in dollars.”

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