Rising Asian currencies offer respite for exports from Kingdom

Rising Asian currencies offer respite for exports from Kingdom

If Bangladeshi taka, Thai baht, and Vietnamese dong consistently appreciate, Cambodia will stand to benefit when it comes to exporting its goods to the US.

The appreciation of currencies of major garment-exporting countries across Asia against the US dollar is offering a great respite for Cambodia’s export sector, which is reeling under the pressure of US President Donald Trump’s 36 percent tariffs, opine experts.

The currencies of all major garment exporting nations in Asia – Bangladesh, Vietnam, Thailand, India, Indonesia and Sri Lanka – have been on an appreciation mode against the US dollar in the current year, especially after the announcement of reciprocal tariffs by the Trump administration on April 2.

When compared, Khmer riel has a relatively fixed exchange rate against the US dollar, which is seen as a great advantage for the country’s export sector. In the Kingdom, garments, footwear and travel goods (GFT) constitute over 50 percent of the total exports. The GFT sector is a major driver of Cambodia’s economic growth, generating substantial foreign exchange earnings and creating numerous jobs.

Bangladeshi taka and Thai baht have remained on an appreciation path against the US dollar, especially during the past few weeks. Both countries compete with Cambodia in the global GFT export market.

To halt the appreciation of taka against the US dollar, Bangladesh Bank, which is the country’s central bank, bought $170 million from commercial banks on Monday with an aim to create market demand for the greenback, various reports reveal.

Speaking to Khmer Times, K G Mohandas, an investor in the Kingdom’s garment and textiles sector, said it will be a boon for Cambodia if the trend continues for quite some time.

“If we observe the trend, we can see that the US dollar has depreciated against all major currencies between five and ten percent since the tariff war was started by Donald Trump. If this trend continues for another one or two years, it will turn out to be an impetus for Cambodian exports.”

He said Cambodia’s major competitors – Thailand and Bangladesh – are struggling to address the appreciation of their currencies against the US dollar. “I run an export unit in Bangladesh with a local partner. Away from tariffs, taka has one more reason to appreciate against the dollar, and that is strong remittances from Bangladeshi expatriates.”

In the fiscal year 2024-25, Bangladesh received over $30 billion in expatriate remittances, a number is expected to increase in the coming years.

“This phenomenon will certainly make Cambodia an attractive place for American investors and importers. However, that’s not enough to make Cambodian goods more competitive in the export markets. The country will have to focus on diversification of export strategies and embrace innovation.”

Tom Goh, an economic analyst, said the US dollar is expected to continue its downward trend against Asian currencies. “The fight between the Trump administration and the Federal Reserve will certainly create a challenging phase for the US dollar. And the Asian currencies will continue to appreciate against the US dollar.”

“If these currencies, especially Bangladeshi taka, Thai baht, and Vietnamese dong, consistently appreciate and make gains over 5-7 percent from the present rate, Cambodia will stand to benefit when it comes to exporting its goods to the US.”

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