Central Bank spent $6 million to stabilize riel value
Tuesday, December 15, 2009 9:04In a bid to stop dropping the devaluation of Cambodia’s national currency, the National Bank of Cambodia (NBC) sold US$6 million to make the value of the riel stable and wanted to retain riel value at about 4,000 riel to every dollar.
The National Bank of Cambodia is the Central Bank which is an autonomous public entity of a commercial and industrial nature. Its principal mission is to determine and direct the monetary policy aimed at maintaining price stability in order to facilitate economic development within the framework of the Kingdom’s economic and financial policy.
The lack of US dollars flowing through the Cambodian market is because of a major decline in the garment sector, tourism industries and limited agriculture production.
Therefore, commercial banks, licensed money changers and listed businesses would be able to buy dollars from NBC.
In early August, the NBC bought US$2 million worth of riels daily for five days after the local currency hit a low of 4,191 against the greenback during the first week of the month. It is necessary for the Central Bank’s policy to inject foreign currency into the market to stop the devaluation of national currency.
“Given the small market for the riel, this sharp rebound clearly reflects the NBC’s intervention,” the Economist Intelligence Unit’s (EIU) Cambodia economist Danny Richards was quoted by the Post earlier this month as saying.
Neou Seilha, an economist at the Economic Institute of Cambodia was quoted by the Cambodia Daily as saying that the dropping value of Cambodia’s national currency was due to a major slowdown in the garment and tourism industries, sectors of the economy that naturally bring US dollars into Cambodia.
Tal Nay Im said that official exchange rates were determined by the NBC as an average of exchange rates at “five large markets in Phnom Penh”, according to the Post.