Riel reacts on Fed stimulus [The Cambodian riel upped against the U.S greenback]

Photo by: Pha Lina
A money exchanger presents Vietnamese dong to a customer in exchange for riels yesterday at a shop near Orussey Market.

Friday, 05 November 2010

By Nguon Sovan

Phnom Penh Post

CAMBODIA’S riel appreciated to 4,135 against the greenback at some money lenders yesterday, as the United States announced huge quantitative easing measures to kick start its economic recovery.

The value of the dollar has slipped since the Federal Reserve announced a plan on Wednesday to spend US$600 billion on government bonds over the next year as part of a scheme of quantitative easing.

The news – which was higher than many forecasts – lifted hopes that the world’s biggest economy could see stronger growth, although some policy makers fretted about the knock-on effects for Asian economies.

The dollar fell against other currencies following the Fed decision. It fetched 80.82 yen in Tokyo trade yesterday, slipping from 81.12 late on Wednesday in New York.

The dollar had fallen over the past few weeks as dealers anticipated the move, at one point hitting a 15-year low of 80.21 against the yen.
Meanwhile, the riel has appreciated after a six-month decline.

According to the daily statistics complied by the Commerce Ministry’s Trade Promotion Department, riel currency strengthened 1.9 percent to 4,185 riel per US dollar yesterday from 4,212 riel per US dollar a day on Wednesday.

Its value has risen up to 3.2 percent, from 4,272 riel per US dollar at the end of August.

Chan Sophal, president of Cambodian Economic Association, said yesterday that the appreciation was not surprising.

“The riel appreciation is due to the depreciation of US dollar, as the US has released more currency in the market,” he said. Tal Nay Im, director general of the National Bank of Cambodia, was overseas yesterday, and could not be reached for comment.

As the riel appreciates, the price of gasoline prices in Cambodia has also increased. It rose by 1 percent yesterday to 4,600 riel a litre from 4,550 riel a day earlier, the statistics from the Commerce Ministry showed.

Asian markets also rose yesterday following the Fed’s move. Tokyo’s Nikkei soared 2.17 percent, or 198.80 points, to 9,358.78, with sentiment also boosted by strong earnings reports. Hong Kong jumped 1.18 percent by the break and Shanghai gained 1.26 percent. Sydney ended 0.48 percent, or 22.7 points, higher at 4,745.3. Qantas slipped almost four percent intraday as news broke that one of its A380 superjumbos had got into trouble over Indonesia in an engine incident.

“It was a wild night, so it’s early days, but with QE2 in the bag, the market might start to view positive US economic data in a more bullish light,” Macquarie Private Wealth adviser Shannon Briggs said.

Oil rose on hopes that demand in the US would rise after the Fed announcement. New York’s main contract, light sweet crude for delivery in December, rose 52 cents to $85.21 a barrel, while Brent North Sea crude for December gained 61 cents to $86.99. Gold closed at $1,358.00-1,359.00 an ounce in Hong Kong yesterday, down from Wednesday’s close of $1,354.50-1,355.50.

ADDITIONAL REPORTING AFP