The National Bank of Cambodia (NBC) last year used less riel to buy US dollars thanks to more financial institutions using the central bank’s new monetary policy instruments. As a result, the exchange rate was stabilised.

The NBC annual report said that between January and December last year, the bank injected $875 million worth of riel into the economy to stabilise the exchange rate. This amounted to a nine per cent decrease from 2017.

As a result of the intervention, the exchange rate against the dollar remained stable at an average of 4,050 riel per US dollar.

As Cambodia is a heavily dollarised economy, the NBC is limited to purchasing dollars and making changes to reserve requirements to stabilise the exchange rate.

Need for riel

The NBC said many financial institutions, including microfinance institutions, are in need of more riel, which they are able to receive through the NBC’s new monetary policy instrument, which holds liquidity-providing collateralised operations (LPCOs).http://www.phnompenhpost.com/business/exchange-rate-stable-after-national-bank-introduces-monetary-policy