The National Bank of Cambodia is purchasing another $3 million dollars worth of riel this week to help the national currency appreciate against the green back, bringing the total amount dispersed so far to $10 million, the bank said in a statement yesterday.
The central bank is attempting to exchange dollars for riel in order to render the local currency scarcer and therefore more valuable.
According to the bank’s statement, $1 million worth of riel was bought from commercial banks and currency exchanges on Monday. Another $2 million will be purchased on today and Friday.
The riel’s exchange rate stood at 4,262 to the dollar yesterday afternoon according to Ly Hour, the capital’s largest currency exchange, a 0.25 percent gain in value compared to the same day last week and a sign that the bank’s purchase of riel is starting to have some effect.
Nonetheless, the riel’s value compared to the dollar is still down 3.44 percent compared to April’s exchange rate when it traded at 4,120 riel.
Analysts say the dip in the riel’s value is a seasonal trend as there are fewer tourism dollars flowing through the economy at this time of the year and a lack of transactions in riel due to the end of the harvest season.
Steven Higgins, CEO of ANZ Royal Bank, said the depreciation of the riel held little consequence for the banking sector with commercial banks almost entirely operating in dollars. And for those who use riel in the provinces, their purchasing power will also see little change as most of what they buy is denominated in riel, he said.
“But for part of the community it is relevant,” said Mr Higgins. “For the government workers in Phnom Penh it will probably have more of an impact on them than those in the provinces as their purchases are in dollars.”
Civil servants in the capital are paid in riel.
“I don’t think it’s a grave situation at all. It is just part of the management to keep the riel within a certain band,” Mr Higgins added.