Khmer Time News: H.E. Dr. Chea Serey, Governor of the National Bank of Cambodia, spoke at a seminar on the importance of the Riel in the national economy at the National Assembly building on March 20.      

H.E. Dr. Chea Serey called for greater use of the Riel to reduce Cambodia’s economic reliance on the US and promote national economic growth. ​​​​​​​​​​​​​​​​​​​​​​​​​This, she said, would also enhance the National Bank’s ability to implement monetary policy. Over the past two decades, the Cambodian Riel has remained relatively stable, maintaining a market value of around 4100 Riels per US dollar. H.E. Dr. Chea Serey noted that by 2025, the value of the Riel will improve, reaching 4000-4040 riels per dollar.        

She emphasized that the involvement of all ministries, public institutions, and the private sector would help make the Riel the main currency in all economic activities and sectors. The increased use of the national currency would reduce the impact of external factors and give Cambodia greater economic independence. She stated that in less than five years, Cambodia will become an upper-middle-income country by 2030 and a high-income country by 2050.

H.E. Dr. Chea Serey emphasized that the extensive use of the US dollar is making Cambodia vulnerable, particularly during times of economic or financial crises, uncertainties in US policies, geopolitical and economic fragmentation, regional integration trends, and the global trend of de-dollarization.

The COVID-19 crisis demonstrated that Cambodia was unable to fully implement its monetary policy, rendering it ineffective in reducing interest rates or releasing more liquidity to stimulate economic growth.

Serey explained that this issue arises because the National Bank’s monetary policy only affects the Riel. In a highly dollarized economy like Cambodia’s, this influence is limited by US policies.

“Apparently, the National Bank of Cambodia cannot lower interest rates on US dollars, regardless of how high US interest rates are,” she said.

She added that the Cambodian economy has also been negatively impacted by increases in the US Federal Reserve’s key interest rate, as Cambodia spends a large amount of US dollars.

“In America, they increase the value of their currency to reduce inflation. For us Cambodians, the dollar also increases in value, while we want the currency to remain cheap because our country has just recovered from COVID-19, and we want to stimulate economic growth. This creates an obstacle. When the economy is doing well, using the dollar is easy, with the exchange rate at 4050 riels per dollar. But when the economy falters, the dollar’s dominance continues. That’s how we know we are dependent on the United States because we rely on American money,” she said.