The National Bank of Cambodia reiterated Tuesday its commitment to keep the riel steady at 4,000 to the US dollar until the elections, even if it means auctioning dollars twice a week.
National Bank Director Chea Sok acknowledged that the central bank already has sold $2.6 million at auctions in June, compared with $1.8 million in all of April and May.
Selling dollars has the effect of increasing the supply of dollars in circulation, thus decreasing its value against the riel.
“We may sell more money this month,” said Chea Sok. “It depends on the situation of the currency.”
Previously, bank officials said that dollar auctions would be held only about once a week.
The riel has plummeted 50 percent from 2,700 to the dollar since last July’s factional fighting. The decline has been blamed on a variety of factors including the economic slowdown, the government’s budget shortfall, and political party expenditures.
On Wednesday, Standard Chartered Bank listed the riel at 3,995 to the dollar, while it was trading at private exchange booths at about 4,045.
Chea Sok said the National Bank had wanted to keep the riel at 3,500 to 3,700 to the dollar, but now “it is quite good if we can keep the riel stabilized until the election at 4,000.”
Chea Sok also continued to deny the central bank is printing more riel to pay the government’s bills. He reiterated that riel has been printed only to replace old riel being taken out of circulation, “because with the dirty money, there are viruses that can make people sick.”
A well-respected economist indicated little concern Monday with the riel’s stability as the elections approach.
Part of the thinking is that riel spent by political parties will be offset by dollars spent by election-related workers from outside.
But the economist did note that the country’s currency had slipped faster to 4,000 than expected, and that the government has borrowed more than $10 million from the National Bank to cover its budget shortfall.