The riel appreciated slightly against the greenback over the past few
weeks in comparison with the end of October, thanks to an improvement in
economic activity and increased demand for local currency during the harvest
season.
A banker and an economist also
said the rise in demand for the riel was reflective of an increase in trust by
the Cambodian population, as well as an improvement in tax collection, which is
billed in the local currency.
According to the daily
commodities report from the Ministry of Commerce, the riel appreciated more
than one per cent to 3,998 riel to the US dollar in comparison with 4,042 at
the end of October.
Rath Yumeng, the head of treasury
at Acleda Bank, told the Post yesterday the demand for riel in November had
increased with the onset of the harvest season.
The expansion of Cambodia’s
economy had also helped, Yumeng said.
“I see that this month, the
demand for riel has been high during the harvest season, as the rural
population prefers to use riel when they sell their products,” he said.
Yumeng also noted improvements in
tax collection, resulting in an increased absorption of the local currency from
the market.
Chan Sophal, president of the
Cambodia Economic Association (CEA), echoed Rath Yumeng’s comments, saying the
improvement in Cambodia’s economy — particularly the rural sector — had been
the main contributor to the appreciation of the riel.
The rise of the local currency
was contributing to building the economy and ran along with the strengthening
of monetary policy by the National Bank of Cambodia (NBC) on the promotion of
using the local currency, Sophal said.
“I have noticed the trend of
using local currency is on the rise. It emphasises Cambodians’ increased
confidence in the riel — and that’s a good thing,” he said.
Yumeng also made the point that
the banks’ promotion of deposits in riel with a high interest rate was another
factor contributing to the currency’s appreciation.
“The total of our riel deposits
is increasing,” he said. “Riel now account for more than 10 per cent of the
total deposits taken.
“Previously, it was less than 10
per cent.”
The majority of Cambodians
predominantly use riel, but the NBC’s statistics show more than 90 per cent of
transactions conducted in Cambodia are in US dollars.
According to an NBC survey from
2010, 37 per cent of Cambodians receive their income in riel, 27.5 per cent in
dollars and 33 per cent in multiple currencies.
About 2.2 per cent of Cambodians
use Thai baht, while 0.3 per cent used Vietnamese dong.
Seventy per cent of Phnom Penh
respondents operate solely in dollars, compared with six per cent of
respondents in Battambang, the statistics show.
May Kunmakara
Business & Investment Opportunities
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