Monday, 31 May 2010Nguon Sovan
The Phnom Penh Post
Strong dollar and eurozone worries hobble NBC efforts to stabilise currency
THE riel continued to depreciate against the US dollar last week despite a US$4 million National Bank of Cambodia (NBC) intervention aimed at increasing its value, experts say.
The NBC dipped into its dollar reserves to purchase riel on May 21 in an attempt to shore up the Cambodian currency’s value.
Ly Hour Exchange owner Sieng Lim said the $4 million intervention had been too small to stop the depreciation of the riel, and that its decline is partly the result of a strengthening US dollar.
The riel traded at 4,260 per dollar on Sunday, down 0.52 percent for the week from 4,238 on May 23. The riel has lost 1.67 percent of its value over the last 45 days, down from 4,190 riel per US dollar in mid-April, according to statistics from Ly Hour Exchange.
However, Sieng Lim said the central bank deliberately intervenes gradually in the Kingdom’s currency, a policy she said she supports.
“When the value of the riel fluctuates, normally the NBC spends US dollars to stabilise the riel, or increase or decrease the prices slightly,” she said on Sunday.
“If the NBC injected more US dollars [to purchase riels], the riel’s value would appreciate quickly, affecting people and the price of goods.”
Most international currencies have been dropping against the US dollar, she added, pointing out €1 was worth $1.23 on Sunday, a 12 percent decline from $1.40 for the same date last month.
Cambodia Institute for Development Study president Kang Chandararot said the intervention had been limited by its small size, having only a slight impact on the riel’s exchange rate.
“NBC should release further US dollar reserves to stabilise the riel – each intervention should be around $10 million,” he said. He added that further interventions should be gradually conducted to avoid sharply appreciating the riel and impacting trade.
He estimated that some $500 million worth of riel is in circulation, said that slowing inflows of trade and investment denominated in US dollars have contributed to the recent strength of the greenback against the Kingdom’s currency.
The riel’s exchange rates closely parallel that of the European Union’s currency, he added. “Recent depreciation of the euro also influenced the riel’s depreciation. When the euro has stabilised, so has the riel.”
NBC Director General Tal Nay Im declined to comment on Sunday, but said in a previous interview that the NBC scrutinises exchange rates every day. Analysts have attributed the recent strength of the US dollar to investors reverting to safe assets because of European financial concerns.
The middle of the year is also a traditional soft spot for the riel’s value, according to International Monetary Fund (IMF) data. The currency generally peaks in December and January, as increased tourism brings in additional dollars, and the harvest leads to more transactions denominated in riel.
Generally, the NBC intervenes when the riel drops below 4,200 to the dollar by dipping into its foreign reserves to buy Cambodia’s currency.
It held $2.8 billion in foreign reserves at the end of the first quarter of 2010, according to NBC data.
THE riel continued to depreciate against the US dollar last week despite a US$4 million National Bank of Cambodia (NBC) intervention aimed at increasing its value, experts say.
The NBC dipped into its dollar reserves to purchase riel on May 21 in an attempt to shore up the Cambodian currency’s value.
Ly Hour Exchange owner Sieng Lim said the $4 million intervention had been too small to stop the depreciation of the riel, and that its decline is partly the result of a strengthening US dollar.
The riel traded at 4,260 per dollar on Sunday, down 0.52 percent for the week from 4,238 on May 23. The riel has lost 1.67 percent of its value over the last 45 days, down from 4,190 riel per US dollar in mid-April, according to statistics from Ly Hour Exchange.
However, Sieng Lim said the central bank deliberately intervenes gradually in the Kingdom’s currency, a policy she said she supports.
“When the value of the riel fluctuates, normally the NBC spends US dollars to stabilise the riel, or increase or decrease the prices slightly,” she said on Sunday.
“If the NBC injected more US dollars [to purchase riels], the riel’s value would appreciate quickly, affecting people and the price of goods.”
Most international currencies have been dropping against the US dollar, she added, pointing out €1 was worth $1.23 on Sunday, a 12 percent decline from $1.40 for the same date last month.
Cambodia Institute for Development Study president Kang Chandararot said the intervention had been limited by its small size, having only a slight impact on the riel’s exchange rate.
“NBC should release further US dollar reserves to stabilise the riel – each intervention should be around $10 million,” he said. He added that further interventions should be gradually conducted to avoid sharply appreciating the riel and impacting trade.
He estimated that some $500 million worth of riel is in circulation, said that slowing inflows of trade and investment denominated in US dollars have contributed to the recent strength of the greenback against the Kingdom’s currency.
The riel’s exchange rates closely parallel that of the European Union’s currency, he added. “Recent depreciation of the euro also influenced the riel’s depreciation. When the euro has stabilised, so has the riel.”
NBC Director General Tal Nay Im declined to comment on Sunday, but said in a previous interview that the NBC scrutinises exchange rates every day. Analysts have attributed the recent strength of the US dollar to investors reverting to safe assets because of European financial concerns.
The middle of the year is also a traditional soft spot for the riel’s value, according to International Monetary Fund (IMF) data. The currency generally peaks in December and January, as increased tourism brings in additional dollars, and the harvest leads to more transactions denominated in riel.
Generally, the NBC intervenes when the riel drops below 4,200 to the dollar by dipping into its foreign reserves to buy Cambodia’s currency.
It held $2.8 billion in foreign reserves at the end of the first quarter of 2010, according to NBC data.
9 comments:
More Riel value is donw more it is good for Cambodian economy why Vietnam keep it currency down and China too..
the money in cambodia belong to Nguyen Tan Dung.You guys ce pee ashamed to be xakhmer.
Europe and Greek is in a worst shape than Cambodia. Riel going down because US dollar is going up. In bad economy, people buying US dollar to safety. Euro is at a 4 years low against USD. China is happy to keep their currency down. Low value currency allow the country to export more.
Why the National Bank of Cambodia (NBC)did not buy gold to back up the riel?
Well...Even if the riel is depreciate against the US dollar and this should be a good new because now Cambodia can export more and Cambodia can attract more investments...
we should go back to using our national currency the riel again. we should not be using foreign currency at all in cambodia. using the riel will strengthen our pride and national tradition, etc... it's about our national identity, really. when in cambodia, i think all foreign currency should be required to change to khmer riel. this is cambodia, you know! wake up people! be proud of our national currency! god bless cambodia.
I'm GAY said...
Yuon exercising its colonial power.
Yuon's new strategies see in an article:
« Le Vietnam au Kampuchéa : La stratégie de consolidation »
by Justus M. Van Der Kroef.
Études internationales, vol. 15, n° 2, 1984, p. 291-309.
I copied a little portion from th abstract. To share.
[Hanoi govemment has sent some 40,000 Vietnamese party cadres, civil officiais and professionally trained to direct public affairs. Additionally, some 100,000 Vietnamese farmer s hâve migrated
into Kampuchea, settling in such key provinces as Kompong Speu, Takeo, and Kompong Cham. Additional tens of thousands of Vietnamese settlers hâve moved into
cities and the disputed frontier area. As fighting between the Vietnamese and résistance
groups affiliated with the ''Coalition Government of Démocratie Kampuchea" intensifies,
the Hanoi régime also has been expanding its logistical-military network. This inciudes the construction of a new road network — popularly called the "New Ho CM Minh Trail" — linking the Vietnamese cities of Hue and Vinh, across Southern Laos,
with Northwestern Kampuchea. Additionally, during the early weeks of 1983, a twentyfive
kilomètres long trench, studded with landmines and bamboo spikes has been constructed just inside the Kampuchean frontier, running from the village of Kop
beyond the village of Yeang Dangkum — a région of fréquent guérilla clashes. Along
with the 180,000 man force of regular military maintained by Vietnam in Kampuchea, thèse measures indicate intentions of Hanoi's consolidation of power. Especially in Southeast Asia fears hâve arisen of a permanent Vietnamese "colonization" process in Kampuchea.]
KI if you are serving Khmers not Yuon, you need to stop mocking around in RED. Your job as KHmer if you are, then search all secret informations (History wrote by real historians by the west) that Yuon have been doing to Cambodia. Post the history How Yuon did kill Khmers, so the Khmers can learn the real history not gossiping. I have so many old documents were written since 1800's, 1900's, I copied from the libraries in Ducth, France, but I have to store them all before they may disppeared. I knew when I start to post them, Yuon will try to kill me as they did to Khmer intellectuals. But I will post them in this very near future for you all to know the facts of savage Yuon.
To 8:05AM
Are you out of your mind?
quote:"The middle of the year is also a traditional soft spot for the riel’s value, according to International Monetary Fund (IMF) data. The currency generally peaks in December and January, as increased tourism brings in additional dollars, and the harvest leads to more transactions denominated in riel." that means a large inflow of USD stimulus from tourism in the dry season ie the NBC should look at stabilising the Riel with some sort of stabilisation cycle to iron out the humps (buy up USD in the dry season,sell them in the wet season). On the other hand the use of foreign exchange to stabilise the riel is a sign that our country's sophistication in running monetary policy has not progressed that far since the early 1990's. so what's happened to plans to issue Treasury bills etc.. as instrumts of policy??
"Anonymous said...
More Riel value is donw more it is good for Cambodian economy why Vietnam keep it currency down and China too..
7:42 PM "
Anonymous said...
Europe and Greek is in a worst shape than Cambodia. Riel going down because US dollar is going up. In bad economy, people buying US dollar to safety. Euro is at a 4 years low against USD. China is happy to keep their currency down. Low value currency allow the country to export more.
10:20 PM
Anonymous said...
Why the National Bank of Cambodia (NBC)did not buy gold to back up the riel?
Well...Even if the riel is depreciate against the US dollar and this should be a good new because now Cambodia can export more and Cambodia can attract more investments...
11:09 PM
YES! AH KWAVCK CPP IS SO STUPID!
SHOULD KEEP 4 MILLION FOR SOMETING ELSE!
OR IT USE THE 4 MILLIONS TO BUY RIEL FROM AH KWACK HUN XEN!
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