Country Report Cambodia May 2011

Outlook for 2011-12: Exchange rates

Although the riel regained ground against the US dollar towards the end of 2010, the Cambodian currency depreciated by 1.1% in the year as a whole. Partly owing to the riel's rebound in the fourth quarter of 2010, when the currency strengthened by more than 4% against the US dollar, the riel will appreciate by 2.4% on an annual average basis in 2011. However, the large deficit on the current account will weigh down on the riel, and the NBC will therefore intervene periodically to support the currency by selling the country's foreign-exchange reserves. The riel will depreciate by 0.6% in 2012. 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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