One day after Cambodia’s currency hit a 12-month high, the riel was trading steadily at 3,500 to the US dollar at the city’s exchange shops, while economists and government officials suggested varying reasons for its brief rise.
Tal Nay Im, National Bank of Cambodia deputy director-General, on Monday predicted the riel would level off in the 3,500 to 3,580 range.
And in an announcement Monday, the NBC vowed to keep the riel stable. According to a statement broadcast on Apsara radio Monday, the bank will set a “suitable” rate of exchange for itself and at the Foreign Trade Bank, and is prepared to buy riel from major currency dealers at regular intervals in order to keep its value steady.
It also stated that currency speculators had made a large profit from the riel’s wild fluctuations on Sunday, when the riel rose briefly to 2,900 before dropping again and leveling off at about 3,500 to the dollar.
Explanations have varied for the riel’s sudden strength since the July 26 polls, when it was trading at about 3,900 to the dollar.
NBC officials suggested that “psychological” factors have played a major role.
The riel recently has taken the back seat to the US greenback in most transactions. The calm political situation following the polls, however, has given people confidence to use the currency, officials said.
But there were also rumors that salary payments by the National Election Committee over the weekend may have contributed to the riel’s sudden rise.
NEC Treasurer Chhay Kim said dollars were changed for riel by the National Bank on Sunday, but he could not give an amount. He suggested that perhaps the NBC had run short of riel and had to buy riel from exchange shops to complete the transaction, but Tal Nay Im refuted this.
Economist Bit Seanglim said the NEC payments may have played a small role, but attributed the riel’s recovery mainly to increased confidence in the economy. The riel was trading at about 2,700 before July 1997.
