Cambodia: Rising Riel in circulation earns demand in public
The prudential monetary policies and Riel promotion have built price stability of Riel, which earned public trust over the circulation of the national currency, said a senior official at the National Bank of Cambodia.
Chea Serey, Director General of Central Banking of the National Bank of Cambodia, made the remarks during an event on promoting Khmer Riel to mark the 42-year anniversary of Riel circulation in Kampot province recently.
According to a survey by the National Bank of Cambodia and the Japan International Cooperation Agency, the riel is widely used in day-to-day expenses, she said.
“The implementation of monetary policies, combined with the participation of all stakeholders has resulted in a steady increase in the volume of the riel in circulation, as the value of the riel has stabilised, reflecting the growing demand and public confidence in the riel,” Serey added.
According to Serey, over the past 42 years, the presence of the riel has contributed significantly to the restoration and building of economic and social sovereignty through its role as a scale, value means of payment and savings.
Serey attributed this to political stability, macroeconomic stability and development in all areas to make people and investors repose more confidence in the riel and the future of the Cambodian economy.
The national currency represents the monetary sovereignty and the strength of a nation. In order to achieve long-term, sustainable and inclusive growth, Cambodia needs to be more independent from foreign currencies to exert greater control over its monetary and economic policy.
The central bank has a role to play in absorbing these currencies through the conversion of the national currency. If only the riel was used in Cambodia’s economic activity, it could significantly increase its international reserves by accumulating a surplus of foreign currency inflows into the Cambodian economy every year.
According to NBC, the accumulation of international reserves increases national wealth, enhances monetary confidence and strengthens a solid foundation for macroeconomic stability.
Appropriately high foreign reserves will also allow the central bank to be more likely to intervene in the foreign exchange market to reduce drastic fluctuations in the value of international currencies in order to achieve achievements that support economic growth.
NBC said that the exchange rate between the local currency and the US dollar remains stable, which helps to boost purchasing power and reduce the impact of increasing inflation.
The central bank sold $600 million of its foreign exchange reserve as of June this year to banks and money changers through auctions to stabilize the exchange rate.
“Growing the foreign exchange reserve builds wealth for the country, enhancing confidence in the local currency and strengthens the foundation for macroeconomic stability,” NBC said.
Experts believe increasing the foreign exchange reserve is important so the government could intervene when necessary, especially in the context of unpredictable global market developments.