[PHNOM PENH POST]
Cambodia's total foreign reserves jumped to US$3 billion in the first
half of 2011, up from $2.7 billion at the end of last year, according to
the National Bank of Cambodia.
The reserves help to bolster the
Kingdom’s financial standing, which in turn draws investor interest and
allows for greater bargaining leverage in debt negotiations, an NBC
official said.
“A higher level of reserves can enhance public and
investor confidence, and this is very important for banking and
financial stability,” director general and spokeswoman Nguon Sokha said
yesterday.
The reserves – which are largely in US dollar, though
the NBC is trying to diversify its holdings – also can be used to grow
the economy, as well as serve as a buffer against regional or global
financial crises, she said.
Significant foreign reserves granted
the NBC some ability to defend the exchange rate of the riel in
circumstances like the 1997 Asian and most recent global financial
crises, according to Nguon Sokha.
Economists said the increased
reserves indicated an overall improvement in the Cambodian economy, as
foreign investment and aid flowed into the country.
“It means
Cambodia … is resilient to external negative shocks,” Suzuki Hiroshi,
CEO of the Business Research Institute for Cambodia, said yesterday.
He
noted that the $3 billion represented enough reserves for the Kingdom
to purchase up to four months worth of needed imports, when three months
was the norm.
Cambodia Economic Association president Chan
Sophal cautioned against holding too high a reserve total. The NBC
instead should put some of those reserves to work in other ways, he
said, such as reducing the country’s trade deficit.
However,
Nguon Sokha emphasised that Cambodia’s reserve level was not too high.
“Other countries hold more reserves than this,” she said.
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