The National Bank of Cambodia issued a statement today saying they would auction $50 million US dollars to strengthen to Cambodian Riel by intervening in the foreign exchange market.
The announcement said that due to the impact of the Covid-19 pandemic, the global economy has slowed down and the currency has depreciated. Cambodia has also been affected and the pressure on its currency has doubled.
The National Bank stated that the exchange rate of Riel to the US dollar this year is different from previous years. In order to increase the purchasing power of the Riel and to improve people's lives, the National Bank announced that it will intervene in the foreign exchange market by auctioning $50 million dollars.
The National Bank is hoping that licensed banks, microfinance institutions, money exchanges and other financial institutions will participate in the auction to stabilize the Riel exchange rate. The lowest bid price will be announced on the morning of the auction day.
National Bank of Cambodia auctions off $50 million
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National Bank of Cambodia auctions off $50 million
Bringing the news. You stay classy, nas, Cambodia.
Thats funny, khr has been in a tight trading range 3950 to 4100 since 2011.
50 million usd to khr is hardly going to stave off double pressure on khr.
What are they not telling us.
50 million usd to khr is hardly going to stave off double pressure on khr.
What are they not telling us.
Am I the only one who doesn't understand how this works or why?
So, auction $50m of US$, buyer pays in Riel (or other currencies... RMB??)? They can bid 3000-4000 r per $? Then what happens to the $'s?
Enlighten me, thank you.
So, auction $50m of US$, buyer pays in Riel (or other currencies... RMB??)? They can bid 3000-4000 r per $? Then what happens to the $'s?
Enlighten me, thank you.
Maybe willing to shift from "pegged to USD" to "pegged to CNY"
In forex terms 50M is a drop in the ocean. Totally insignificant.
Or it might be the chance for a few connected friends to buy US$ at friendly "auction winners" prices.
Or it might be the chance for a few connected friends to buy US$ at friendly "auction winners" prices.
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Nope I don’t really get it either,John Milton-Keynes wrote: ↑Wed Oct 21, 2020 11:52 amAm I the only one who doesn't understand how this works or why?
So, auction $50m of US$, buyer pays in Riel (or other currencies... RMB??)? They can bid 3000-4000 r per $? Then what happens to the $'s?
Enlighten me, thank you.
Lowest bid wins, I assume there must be an undisclosed reserve price.
The way i see it the national bank is selling usd for riels.
Theyre encouraging other entities to sell usd for riels too.
Its an intervention strategy that australia uses to strengthen the aud they sell usd in the billions.
Something not make sense with only 50 m usd.
Theyre encouraging other entities to sell usd for riels too.
Its an intervention strategy that australia uses to strengthen the aud they sell usd in the billions.
Something not make sense with only 50 m usd.
Yes, exactly. This is the way that central banks prop up their currencies, sell some reserves (usually in USD) and buy the local currency (in this case KHR). This has the effect of supporting the price of KHR. The only problem is that the supplies of USD are limited and speculators can keep betting against the central bank (think Soros and the Pound in 1992). When a country wants to depress the level of its currency (as Switzerland sometimes does) that is easy as it can print limitless supplies of its own currency and sell it ad infinitum.confused wrote: ↑Wed Oct 21, 2020 3:46 pmThe way i see it the national bank is selling usd for riels.
Theyre encouraging other entities to sell usd for riels too.
Its an intervention strategy that australia uses to strengthen the aud they sell usd in the billions.
Something not make sense with only 50 m usd.
As to whether 50m USD is sufficient, we shall see.
History tells us that currency pegs don't last forever.
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