In its forex intervention, the central bank sold $20 million on September 2, 6 and 17, $30 million on September 8, and $40 million on September 21, The Post understands. Hean Rangsey
The National Bank of Cambodia held five currency auctions from September 2-21 and sold $130 million on the foreign exchange (forex) market, meant to stabilise the riel’s fluctuations against the greenback, shore up economic activity during the ongoing health crisis and power a faster economic recovery.
In its forex intervention, the central bank sold $20 million on September 2, 6 and 17, $30 million on September 8, and $40 million on September 21, The Post understands.
NBC director-general Chea Serey told The Post that the central bank has been very effective in stabilising riel exchange rate movements over the last two decades, maintaining the purchasing power of the local currency, building confidence in the riel and encouraging its circulation, as well as KHR-denominated savings.
“This significantly contributes to stabilising the macroeconomy and to the improvement of economic activity towards sustainability,” she explained.
To maintain the riel’s stability in the forex market, NBC cautiously monitors trends, prices and news, buys and sells KHR-denominated bills to financial institutions through the NBC Platform (NBCP), sells USD through auctions, and uses other key financial tools, she said.
These include tweaking the interest rates on the liquidity-providing collateralised operation (LPCO) – a financial tool that allows the NBC to lend to financial institutions in the local currency – or the negotiated certificate deposit (NCD), a tool that allows the financial sector to deposit with the central bank to earn interest, she noted.
“In the current context, Covid-19’s impact on the economy has been putting more pressure on the currencies of developing countries,” Serey said, noting that the riel had escaped the brunt of pandemic shocks.
“Changes in fiscal and monetary policies were made in Cambodia and around the world to support economic recovery, which, as anticipated, affected exchange rates involving the riel, requiring the NBC’s active engagement.
“That being the case, the US dollar auction is part of operations to back the stabilisation of riel exchange rates and contribute to creating a favourable environment for a fast economic recovery,” she said.
Acleda Bank Plc president and group managing director In Channy underscored that the NBC’s intervention policy is designed to actively boost economic activity and stabilise the macroeconomy.
“This is marvellous news – Acleda Bank always takes part in the bidding process. The auction is an exceptional occasion for the NBC to apply its monetary policy oriented towards stabilising the riel, releasing foreign currencies to buy KHR.
“Acleda Bank can on-lend the US dollars to those enterprises that need the foreign currency as per their choice,” Channy said. “The NBC conducting auctions helps bolster public confidence in the KHR, and of course, it’s a part of economic stability in any environment, including a healthy [Covid-free] one.”
NBC’s Serey said the central bank will continue to undertake exchange rate policy in a precautious and flexible way, in light of the protracted Covid-19 crisis.
“The NBC will also continue to use the existing monetary policy and closely work with the Ministry of Economy and Finance to ease depreciation pressure on the riel in the aim of actively enhancing its resilience, and to restore Cambodia’s economy during and post-crisis,” she said.
