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Cambodia: Riel gets first appreciation in 8 months
The average value of Riel between buy and sale in the domestic foreign exchange market fell 0.6 percent to 4,115 riel per dollar in November 2022 from 4,140 riel per dollar in October, while the official exchange rate declined slower by 0.46 percent to 4,122 riel per dollar from 4,141 riel per dollar, according to the latest report of the National Bank of Cambodia (NBC).
The falling value of riel reflects the appreciation of Cambodia’s official currency as the report also indicates that the market buy rate of riel against US dollar appreciated by 0.6 percent to 4,110 riel per dollar in November 2022 from 4,135 riel per dollar in the previous month of the same year, while the sale rate fell to 4,120 riel from 4,145 riel per dollar.
However, the report does not reveal the reason behind the first appreciation of Riel in the market buy rate in November after it had depreciated in from April to October 2022. The value of riel currency rose about 1.65 percent to 4,135 riel per dollar in October compared to 4,068 riel per dollar in April 2022 after the exchange rate stayed stable from January to April.
Chan Sophal, Executive Director of think thank Centre for Policy Study (CPS) told Khmer Times yesterday that Riel against US dollar normally shifts to an appreciation point during the period from October to April, which is the dry season of Cambodia when the dry north-east monsoon characterised by hot wind blowing across the entire country.
“According to my observations, the riel has been appreciating a bit in almost every dry season against the dollar. The reason could the bigger demand for riel in the dry season compared to the wet season,” said Sophal. The southwesterly monsoon from May to October brings the rainy season, humidity and strong winds. The northeasterly monsoon brings sunshine.
The Economic and Monetary Statistics for November 2022 issued by NBC—Cambodia’s central bank—also shows that the inflation of consumer products has continued to fall to 3.21 percent in November from 3.64 percent in October in 2022 even though the price indexes of the 12 categories of goods all increased in November compared to the previous month.
The report released on Wednesday by NBC—which is also Cambodia’s monetary authority—pointed out that the price indexes of the 12 categories of goods all increased in November 2022, while all of the prices of 40 items of goods including diesel and regular gasoline rose after six of them had fallen, five had risen and one had stayed unchanged in October 2022.
“The fall of inflation of consumer products … reflects mainly the slower increase in the price of oil and foods compared to the previous period,” the report pointed out, adding that the six categories of goods include houses, water, electricity, gas and fuels, transportation, communications, entertainment and culture, restaurants; and other goods and services.
The other six categories of goods include non-alcoholic foods and beverages, alcoholic beverages and tobacco, clothes and footwear, furniture, household products, health and education. The 40 items of goods listed in the report include gasoline, motorbikes, gas, processed eggs, solid fuel, processed durable vegetables, liquid fuel, restaurants, hotels, transportation, pure drinking water, fruit juice, durable fruits, infant clothes, food products, entertainment, personal care products and others.
The statistics report also shows that the interest rates—average weighted according to banking transactions for the new loans in November—for loans in US dollar and Riel provided by banks fell 0.2 percent to 8.85 percent per annum and 0.57 percent to 10.89 percent per annum respectively, while the weighted average interest rate for deposits in Riel rose 0.03 percent to 0.89 percent per month, but that in US dollar fell 0.11 percent to 0.49 percent per month.
The falling interest rates for loans released by banks in Cambodia may reflect the rising demand for cash in the economy as the total amount of loans provided to different sectors, especially retail, housing, wholesale, real estate, construction, personal items and agriculture, increased slightly 0.23 percent to approximately $46.84 billion in November from 46.73 in the previous month of 2022, according to the report.
The rising interest rate of 0.22 percent for deposits at slower pace between October-November and September-October 2022 reflects the slightly slower inflow of deposits into the banking system in Cambodia as the total amount of deposits in banks fell to $37.24 billion in November from $37.32 billion in October last year, according to the report.
The report’s graphic shows that the deposits in riel rose to 11 percent of the total amount of deposits in all currencies in November last year, while the deposits in dollars and other currencies fell to 89 percent, which contributed 50.3 percent by fixed or termed deposits, 19.8 percent by current deposits, 28.5 percent by savings deposits and 1.5 percent by other categories of deposits.
The total amount of loans released by microfinance institutions (MFIs) had increased about 2 percent to over $9.45 billion at the interest rates between 1.1 percent and 1.4 percent per month or between 13 percent and 17.3 percent per annum in November from $9.36 billion in October of last year at between 1.1 percent and 1.5 percent per month or 13.1 between percent and 17.4 percent per annum.
The latest issue of Economic and Monetary Statistics shows that there are 59 commercial banks that include 12 branches of foreign banks, 29 locally-established banks and 18 subsidiaries, nine specialised banks, six representative offices, 2,860 money exchangers and five third parties. The figures show that the number of money exchangers was nine less than in October 2022.
In the banking system of Cambodia, there are 87 MFIs that include 82 MFIs themselves, five Microfinance Deposit-taking Institutions (MDIs), 223 rural credit institutions, 16 leasing firms, 34 payment service providing firms, 21 provincial branches of NBC and one Credit Bureau (Cambodia) Co., Ltd, according to the figures that stayed unchanged.
Source: https://www.khmertimeskh.com/501236019/riel-gets-first-appreciation-in-8-months/