The new 100,000 riel banknote depicting the late King Father Norodom Sihanouk is not just a pretty historical token. It will also help inject much needed cash into the economy, according to the National Bank of Cambodia.
Although take-up will occur as older banknotes of other denominations deteriorate, the introduction of the new denomination will provide additional liquidity that is demanded by Cambodia’s rapid growth, NBC director-general Nguon Sokha said. …
Kang Chandararot, president of the Cambodian Institute for Development Study, is concerned that now is not the right time for increasing the liquidity volume in Cambodia. A strengthening dollar, “seasonal riel demand”, a lack of long-term growth and inflationary pressures from the Kingdom’s neighbours are all reasons increasing liquidity was “dangerous”, he said. …
Daniel de Carteret
ANZ chief executive Mike Smith says Cambodia should decouple the riel from the US dollar to a stand-alone currency and align itself to the Chinese renminbi (RMB), given the shift in global trade flows.
At the Cambodia Outlook Conference in Phnom Penh yesterday, Smith said: “I believe you have to think very seriously about linking your currency to somebody else’s currency, because you don’t control the printing press and that will always give you trouble in times of either tight or excessive liquidity, as we have now. …
But Business Research Institute for Cambodia chief executive Hiroshi Suzuki said although Chinese companies had already begun exporting in RMB with incentives from the Chinese government, he expected the US dollar to remain the dominant currency in the short term. …
Daniel de Carteret and May Kunmakara
The Kingdom’s consumer price index declined by 0.1 per cent in October for the first time in 2012 due to a decline in food and gasoline prices and a stable US dollar exchange rate, according to official data released by the National Institute of Statistics (NIS).
Officials said the rate reflects the decline in the region and the stabilisation of local currency against the greenback. “We noticed that our inflationary rate has been pretty good in the last few months,” said Khin Song, deputy director general of the NIS. …
The Bank of China launched the first dual currency international bank card yesterday, part of a move to expand in the local market by offering both US dollar and Renminbi accounts on a single card.
People can get the card for a deposit of US$10 at the Bank of China office.
BOC’s Cambodia CEO Chen Changjiang expressed optimism about Cambodia’s future, citing the bank’s growth to 5,600 customers and $350 million in deposits since it opened in Cambodia in 2010. …
Stuart Alan Becker
A NEW report from the Organisation for Economic Co-operation and Development (OECD) says GDP growth in Cambodia over the next five years is likely to hit 6.9 per cent, the highest of any ASEAN country apart from Laos.
However, the report warns that Cambodia needs to urgently address problems with productivity and infrastructure, with a largely unskilled labour force and an “inefficient education system” acting as a drag on economic progress. …
Cambodian Prime Minister Hun Sen said Wednesday that the government would intervene to stem the riel’s sharp rise against the US dollar in recent days.
“The Cambodian riel has been rising for several days,” he told a land-distribution ceremony in Oral district in Kampong Speu province, blaming strong demand for the local currency.
“The dollar was quoted at 3,888 riel in some markets yesterday but we want our currency around 4,000 riel,” the prime minister said.
Rasmei Kampuchea Daily
Price levels picked up during the first half of 2012 but will likely cool down in the second half of the year due to changes in energy prices and major food related items. Therefore, the inflation rate has been upwardly adjusted by 30 basis points to 4.8 percent year-on-year in 2012.
The value of the Cambodian riel has been fairly stable against the US dollar but it appreciated against the IMF Special Drawing Rights (SDR) as a result of the European sovereign debt crisis and also gained against the Thai baht. The appreciation of the riel against the baht has a negative impact on domestic prices of paddy rice to a certain extent, as a significant portion of paddy rice is traded in the Thai currency.
There was a marked increase in liquidity in the Cambodian economy as of May 2012. Yet the growth rate of the amount of local currency in circulation was slower during that period compared to the same period in 2011. Meanwhile, there was a remarkable drop in average interest rates as of April 2012 due to fierce competition in the banking sector and lower borrowing costs. …
Economics Today, P. 28
PHNOM PENH—In its home country, the Cambodian riel has long played second fiddle to the U.S. dollar—but a new stock exchange and government de-dollarization policies could bolster it in coming years, policy makers and experts say.
Dollars change hands with greater frequency than riel in the capital city, though both are universally accepted. Some taxi drivers say they prefer the U.S. currency simply because it means handling fewer bills; there are 4,000 riel to the dollar.
A 2011 report from the International Monetary Fund estimated that dollars make up about 80% of Cambodia’s money supply, up from less than 70% a decade ago.
That worries the National Bank of Cambodia because it renders monetary policy ineffective as a brake or cushion for the economy. …
An increase in agricultural trading has caused the value of the US dollar to dip below 4,000 riel in the past three consecutive days, as there is now a higher demand for the Cambodian riel, money exchangers and an official from the National Bank of Cambodia said yesterday.
Nguon Sokha, director-general of the National Bank of Cambodia, said that the high demand for riel is seasonal, and often comes at the same time as farmers and agricultural traders flood into the city to trade their products.
She also rejected that external impacts, such as the current weakening of the US dollar or the European sovereign debt crisis, were the cause for the dip. …
Hul Reaksmey and Dene-Hern Chen, P. 20
Cambodia’s total foreign reserves jumped to US$3 billion in the first half of 2011, up from $2.7 billion at the end of last year, according to the National Bank of Cambodia.
The reserves help to bolster the Kingdom’s financial standing, which in turn draws investor interest and allows for greater bargaining leverage in debt negotiations, an NBC official said…
May Kunmakara, p.7
The China’s Taiwan leading bank, Mega International (ICBC), on September 30th, opened its first branch in Phnom Penh, aiming to attract more Taiwanese investors to Cambodia and boosting further business.
“The Mega ICBC will bring capital investment injection into the economy of Cambodia, employment opportunities, upgrading the know-how of the banking industry, providing more funds to local enterprises, offering better banking services to the customers and to help boom the economy, especially in the factor of international trade,” Chay You Cai, Chairman of the Mega ICBC Phnom Penh branch said during the inauguration.
MegaICBC is the most internationalized bank in Taiwan, which has 108 branches in Taiwan, and 32 overseas branches, representatives and subsidiaries. “Mega ICBC Phnom Penh Branch commences to serve in Cambodia and become the 33rd overseas outpost of Mega ICBC, “ he added. Mega ICBC is the sole US dollar clearing and settlement bank in Taiwan which is only one of two banks in Taiwan to supply Chinese RMB banknotes to customers and other local banks in Taiwan…
Soklak p 3, vol 5, no 40
While the Cambodia Securities Exchange (CSX) recently opened its doors for business, it’s not quite ready to actually do business. As it currently stands, there is no actual trade taking place, making it the smallest bourse in the world in terms of market capitalization. However, it’s only a matter of time before the fledgling stock exchange begins the process of trading stocks. “The market will [be] fully operational before the end of this year. That means listing companies will complete the initial public offering (IPO) process and be able to sell their shares in the secondary market of the CSX in Cambodia,” said Keat Chhon, Deputy Prime Minister and Minister of Economy and Finance at the recent CSX inauguration ceremony…Keat Chhon expected that three state-owned enterprises–Phnom Penh Water Supply Authority (PPWSA), Telecom Cambodia (TC) and Sihanoukville port–will be able to be listed on time this year, which should pave the way for other companies to be listed on the bourse.
(Leng Bunthea, p 22)
With prices creeping upward and the central bank looking to take monetary action to fight inflation, the government has suspended the publication of the monthly Consumer Price Index, an official at the Ministry of Pallning said yesterday. Sam Saroeun, deputy director of the statistic department in the Ministry of Planning, said that the Ministry of Finance had requested his ministry, not publish the CPI report, which details June’s inflation rate. An official at the Ministry of Finance, however, said he was unaware of any suspension of statistics on consumer prices.
(By Simon Marks, pg. 1)