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Riel Stabilizes After Hitting Three Year Low

Riel Stabilizes After Hitting Three Year Low

T he value of Cambodia's currency relative to the US dollar appears to

have stabilized at around 2750 following a plunge in late August which saw the riel

trade as high as 3000 to the dollar - the weakest position since May 1993.

The National Bank of Cambodia (NBC) intervened August 26 after rumors that the central

bank was short of dollars swept the money market. NBC officials have speculated the

rumor may have been created by a cartel of businessmen seeking to profit in buying

cheap riel and selling when the exchange rate stabilized.

A spokesman for the Asian Development Bank said, however, continuing volatility on

the political scene may well have contributed to the currency's instability.

According to a UNDP report published early September, the riel had showed a slight

but steady depreciation from the beginning of 1996 when it stood at 2554 to the dollar,

until the end of July when $1 would buy 2664 riels.

Government officials have said an exchange rate of 2500 to the dollar is the optimum

value for Cambodia's economy.

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