Do Khmer people hate their riel currency?
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Do Khmer people hate their riel currency?
Yes, USD is used in a lot of transactions
Yes, KHR is fluctuating.
Yes, the biggest denomination in KHR is 100 000, which is equivalent to 25 USD.
But when we look at some of their neighbours, they have no issues with their local currency :
China's biggest banknote is 100 CNY, approx 16 USD
Thai's biggest banknote is 1000 THB, approx 31 USD
Vietnam's biggest banknote is 500 00 VND, approx 23 USD
All of them don't have an issue with talking about Millions, Billions or even higher numbers.
Khmer people look at denominations higher than 10 000/20 000KHR as if those were fakes or with lesser value than toilet paper. Not to mention that they will always try to rip you off a few cents when giving change if you are paying in KHR (no matter if the rate if above or below 4000). Currently some shops are changing 1 USD for 4200 (!!!) wtf.
How can you not promote your own currency when you are being so pride of your country, your beers, your history ...
Yes, KHR is fluctuating.
Yes, the biggest denomination in KHR is 100 000, which is equivalent to 25 USD.
But when we look at some of their neighbours, they have no issues with their local currency :
China's biggest banknote is 100 CNY, approx 16 USD
Thai's biggest banknote is 1000 THB, approx 31 USD
Vietnam's biggest banknote is 500 00 VND, approx 23 USD
All of them don't have an issue with talking about Millions, Billions or even higher numbers.
Khmer people look at denominations higher than 10 000/20 000KHR as if those were fakes or with lesser value than toilet paper. Not to mention that they will always try to rip you off a few cents when giving change if you are paying in KHR (no matter if the rate if above or below 4000). Currently some shops are changing 1 USD for 4200 (!!!) wtf.
How can you not promote your own currency when you are being so pride of your country, your beers, your history ...
Why would I care? I'm Khmer
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Using a foreign currency is pretty common in places where there is little faith in the government / official currency. Considering the recent history of this country, I'm not surprised that Cambodians favor foreign currencies. Quite a few countries use the dollar or at least peg their currency to it. So I think it has less to do with them not liking large bills than a belief that their money is safer in USD than KHR. Not all would agree, but this does appear a common sentiment.
"Pride in a currency" is an odd concept. At best, this may evolve after many decades of relative currency stability and relative strength. I don't recall when the KHR rate stabilized around 4000 (the +/- 100 fluctuations shouldn't matter a great deal) but I guess it wasn't "many decades" ago just yet.
From what I can see, many Khmers with "excess/surplus" income convert their currency quickly into somewhat-liquid "stuffs of value". House, car, metals/jewelry, or even lend it out at interest! That would mean the KHR and USD here are pure unit-of-account and media-of-exchange scrip with no strong (or only quite short-term) store-of-value function.
So money here is really just a handy tool for trade or keeping score (which is all it should be imho), a scrip or like a poker chip, "anything" could do but USD and KHR have both been found to do the simple job quite "well enough".
From what I can see, many Khmers with "excess/surplus" income convert their currency quickly into somewhat-liquid "stuffs of value". House, car, metals/jewelry, or even lend it out at interest! That would mean the KHR and USD here are pure unit-of-account and media-of-exchange scrip with no strong (or only quite short-term) store-of-value function.
So money here is really just a handy tool for trade or keeping score (which is all it should be imho), a scrip or like a poker chip, "anything" could do but USD and KHR have both been found to do the simple job quite "well enough".
Not sure if you noticed but the USD gained much strength in recent week vs most/all other currencies. So you need slightly more KHR or CNY/RMB or XYZ to buy 1 USD.. nothing to wtf about. Currencies "float freely" (I know, not really, not fully, not as cleanly as they should) thus reflecting an ever-changing world with a across all regions ever-changing workforce population, productivity, commodity production/consumption patterns etc. etc. If it fluctuates just a little bit that's more a testament to fairly stable currency management.upstage wrote:Currently some shops are changing 1 USD for 4200 (!!!) wtf.
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When a currency is pegged to another currency it doesn't really matter a whole lot what you actually use. Especially when the small fluctuations are so predictable.
The Riel is pegged to the dollar. Every time it get close the edge of the acceptable range (currently 4000 - 4100), the Bank of Cambodia goes and dumps or buys a load of Riel at the gold shops around Psar Tmei that are the epicentre of currency exchange in Cambodia. There is actually so little Riel in circulation that apparently the exchange rate can be influenced by buying/selling as little as $100,000 with the main Psar Tmei currency traders.
The currency has a natural fluctuation that follows transactions in the agricultural sector, with the highest point usually in July and the lowest point in April. Any super conservative investors could make a tidy 2% per annum, buying when it's hot and selling when it rains.
The Riel is pegged to the dollar. Every time it get close the edge of the acceptable range (currently 4000 - 4100), the Bank of Cambodia goes and dumps or buys a load of Riel at the gold shops around Psar Tmei that are the epicentre of currency exchange in Cambodia. There is actually so little Riel in circulation that apparently the exchange rate can be influenced by buying/selling as little as $100,000 with the main Psar Tmei currency traders.
The currency has a natural fluctuation that follows transactions in the agricultural sector, with the highest point usually in July and the lowest point in April. Any super conservative investors could make a tidy 2% per annum, buying when it's hot and selling when it rains.
When the exchange rate is 4075+ area I can accept shops using 4100 as their exchange rate but 4200 is just taking the piss. However it's them basically saying, we don't want riel, if you want to give us riel, it's going to cost you more. I guess we have a choice what currency to pay in.upstage wrote:Currently some shops are changing 1 USD for 4200 (!!!) wtf.
What I really hate on principle is the shops and minimarts that accept riel at 4100 but give back change at 4000.
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Denominations higher than 20,000 are quite rare. I've never noticed anyone caring whether I paid in one currency or the other.upstage wrote: Khmer people look at denominations higher than 10 000/20 000KHR as if those were fakes or with lesser value than toilet paper.
Romantic Cambodia is dead and gone. It's with McKinley in the grave.
April '95: The swift adoption of the new currency could accelerate the "de-dollarization" of Cambodia. The long-term monetary plan is to move Cambodia away from its dual use of dollars and riels, and eventually make the riel the exclusive currency
May '96: Cambodia set to move away from dollars
March '03: A gradual approach to "de-dollarizing" the economy and promoting the riel should be undertaken, and a flexible exchange rate should be pursued.
June '07: Get riel: move to ban US dollar
May '13: “De-dollarization is very critical now.” (NBC's) Chea Serey says Cambodia needs to have the ability and the tools to set interest rates. “We need to be able to use our local currency because it shows our independence and shows our sovereignty.”
April '14: As much as $320 million is being lost annually as a result of Cambodia’s reliance on the US dollar (..) ADB's Menon is urging the NBC to consider installing a new mechanism that could govern riel exchange rates and assist in de-dollarising Cambodia’s economy
Also super-interesting NBC interview:
http://www.phnompenhpost.com/business/c ... -stability
May '96: Cambodia set to move away from dollars
March '03: A gradual approach to "de-dollarizing" the economy and promoting the riel should be undertaken, and a flexible exchange rate should be pursued.
June '07: Get riel: move to ban US dollar
May '13: “De-dollarization is very critical now.” (NBC's) Chea Serey says Cambodia needs to have the ability and the tools to set interest rates. “We need to be able to use our local currency because it shows our independence and shows our sovereignty.”
April '14: As much as $320 million is being lost annually as a result of Cambodia’s reliance on the US dollar (..) ADB's Menon is urging the NBC to consider installing a new mechanism that could govern riel exchange rates and assist in de-dollarising Cambodia’s economy
Also super-interesting NBC interview:
http://www.phnompenhpost.com/business/c ... -stability
Last edited by metaleap on Fri Oct 24, 2014 11:09 am, edited 4 times in total.
I knew it was George Soros I saw sneaking around Psar Tmei the other day!starkmonster wrote:There is actually so little Riel in circulation that apparently the exchange rate can be influenced by buying/selling as little as $100,000
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Yes, that's right.Lucky Lucan wrote: Denominations higher than 20,000 are quite rare. I've never noticed anyone caring whether I paid in one currency or the other.
In Thailand, people pay with 500 & 1000 baht notes, no problem with that (USD value of these denomination is almost equivalent to 50 000 RIELS & 100 000 RIELS, same weight of paper, just a few more 0 on the figure)
In Vietnam, people pay with 500 000 dong notes, they have no problem with that either
So the main question is, why will people prefer a 20 USD note over a 100 000 KHR, or 10 USD over a 50 000KHR. (Leave aside the current exchange rate and let's just hypothetically consider it's 1USD = 4000KHR, no loss in change for either side).
Is it a problem with basic mathematics? To me it feels like there is a real defiance towards the national currency.
As far as not having faith in the government, I'm not sure the Vietnamese is more to be trusted than the Khmer one, neither was the Thai one until the coup.
Why would I care? I'm Khmer
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Considering the amounts of money exchanged at some Ly Hour offices, I highly doubt that.starkmonster wrote:There is actually so little Riel in circulation that apparently the exchange rate can be influenced by buying/selling as little as $100,000
Went there couple of days ago, during the 10 minutes I had been waiting, over 30 000 USD had been exchanged into KHR.
The rate didn't drop meanwhile whatsoever.
Why would I care? I'm Khmer
That's exactly the gist of it, most likely there's a lot more USD20 notes in circulation than KHR50k notes.LTO wrote:Do they "prefer" it?upstage wrote:So the main question is, why will people prefer a 20 USD note over a 100 000 KHR, or 10 USD over a 50 000KHR.
The other thing is inertia, in the words of NBC:
I never noticed any particular currency preference one way or the other in my small-scale here dealings over the last 2 years.The use of the US dollar in Cambodia has dated back more than two decades. Such use has never been a policy decision of the [government] but reflected the preference of the market participants for a substitution currency to the domestic one given the economic difficulties facing the country at the time. Once people get used to the conveniences of using hard currency, there seems to be resistance to reversing the process, even after the macroeconomic conditions have been improved.
It will take a long time to adjust people's behavior.
We are not going to force the public to make payment in riel only. We have been encouraging the use of the riel.
Last edited by metaleap on Fri Oct 24, 2014 11:27 am, edited 1 time in total.
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Gone to the market, paid some food in value of ~ 15 000KHR, gave a 50 000KHR note, lady declined.LTO wrote:Do they "prefer" it?upstage wrote:So the main question is, why will people prefer a 20 USD note over a 100 000 KHR, or 10 USD over a 50 000KHR.
Gave a 20 USD, she picked it up. It clearly wasn't an issue of having not enough money to give change.
I believe they do prefer it.
I'm not even talking about the time I had 100 000KHR notes, was a pain in the ass to break them, even harder than breaking a Franklin.
Why would I care? I'm Khmer
Never happened to me, guess we could file it under anecdotal individual preference rather than nationwide trend?
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