Cambodian Notes “Riel” Usage is Increasing Remarkably

PHNOM PENH— Use of Cambodian riel notes in the economy has surged in the first half of 2016, local press reported Friday, citing central bank figures.

The National Bank of Cambodia (NBC) injected about 2 trillion riel in cash notes (about 489 million U.S. dollars) into the economy during the first six months of the year, an 18 percent rise from about 1.69 trillion riel (about 413 million U.S. dollars) , for the first half of last year.

"The surge was led by increased use of riel in paying for taxes, wages and goods and services, as well as its use in banking, particularly in microfinance," NBC director-general Chea Serey was quoted as saying by the Cambodia Daily newspaper.

Cambodia's economy remains predominantly U.S. dollar-based — with 84 percent of economic transactions conducted in the U.S. currency, according to a central bank estimate — but the government has repeatedly pushed for a transition to the Cambodian riel, partly to give the central bank monetary tools if economic intervention is needed.

Serey said the demand for riel was being supported by official policies, including the central bank maintaining a stable exchange rate between riel and dollar, the bank promoting the use of riel to businesses and the public, and the government encouraging tax payments in riel.

Chann Veasna, CEO of local accountancy firm APV, said his company would not yet be switching to paying wages in riel because staff members said they needed dollars to pay for everyday living costs.

"We have had a meeting with our staff to talk about that, but they said they did not want to be paid in riel yet," he was quoted as saying.

Stephen Higgins, a managing partner of investment and services firm Mekong Strategic Partners, said shifting the Cambodian economy to the riel can only be a gradual process and the de-dollarization will likely take at least a generation.