Use Riel widely, NBC tells stakeholders, public
Use Riel widely, NBC tells stakeholders, public
The National Bank of Cambodia (NBC) yesterday called on the stakeholders, especially the public to continue to use Riel widely to enhance macroeconomic policy management and sustain the economic development of the country.
Speaking at Promotion Program on Riel, Bakong System and KHQR System in Banteay Meanchey Province on Monday, Yim Leat, Deputy Governor of the NBC said the use of Riel has increased significantly lately due to the many stakeholders involved in promoting Riel, but dollarization is still high against the Riel in the economy.
A result of a study by NBC with UNDP in 2023 also shows that factory workers living in the provinces spend up to 92 percent of their total daily expenses in Riel, especially on accommodation, water and electricity, travelling, food, clothing and medicine costs, while urban workers make up 82 percent in Riel expenses.
“Therefore, if the seller and buyer use the same riel, it can help to make the transaction quick and easy, no need to worry about the exchange rate,” he said.
Leat said that Riel has been re-used for 44 years, and for the last two decades, Cambodia has enjoyed complete peace and economic growth, have you seen the currency fall below 4,000 Riel against a US dollar? Or increase more than 4,200 Riel against the US Dollar? “No, we have never seen that. That is to say, Riel maintains its stability,” he said.
However, the use of the US dollar continues to be high compared to Riel, especially in Phnom Penh and provincial towns.
Leat called on ministries, institutions, factories, enterprises, banking and financial institutions, especially the general public to continue to use Riel widely, including making payments in Riel, putting the price tag in Riel, saving in Riel and giving more favors to use Riel throughout the nation.
Hong Vannak, an economist at the Royal Academy of Cambodia, told Khmer Times that due to dollarization, exchange rate fluctuations have a direct and rapid effect on inflation in Cambodia, because when Riel depreciates, the prices of goods and services will rise immediately. Thus, in addition to lower fuel prices and lower food prices, maintaining the stability of Riel exchange rate has contributed significantly to lower inflation.
“Therefore, strengthening the use of Riel more widely is necessary to reduce the influence of external factors on the price level in Cambodia and strengthen the monetary policy to manage price stability and promote economic growth more effectively,” he said.
“The greater use of Riel in the economy can also help raise international reserves at current levels, which will strengthen investors’ and public’s confidence in Cambodia’s economic and financial stability,” he added.
NBC also once explained that economically, more Riel on the market improves the effectiveness of monetary policy. NBC is able to enhance macroeconomic policy management, and sustain the economic development of the country since money supply has a close relationship with production and employment.
The dependence on the US dollar leaves Cambodia vulnerable to economic shocks. If Riel were the main currency the central bank can play the role as the lender of last resort.
The use of Riel can also help the government gain seigniorage (revenue receiving from issuing banknotes).
In addition, if Riel alone were to be used in the common marketplace, it would reduce the transaction costs of exchange operations.
