Country Report Cambodia February 2010

Outlook for 2010-11: Exchange rates

Following an average fall in the value of the riel against the US dollar in 2009 of around 2%, the currency will remain under downward pressure for the next two years owing to the persistently wide deficit on the current account. Although by September 2009 the NBC had built up international reserves of US$2.8bn, equivalent to around six months of imports, the central bank's intervention will do no more than slow the riel's rate of decline. We expect the currency to depreciate by an average of 1.2% a year in 2010-11, to stand at CR4,249:US$1 by the end of 2011. Given the continuing lack of confidence in the riel, the US dollar will remain the currency of choice in Cambodia for trade and investment.

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