Opinion split over currency

Delegates attend a consultation at Phnom Penh Hotel on Friday to discuss currency use in Cambodia’s new stock exchange. Photo by: Sovan Philong

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We will have a meeting with Keat Chhon for approval ... it won’t take a long time to decide - it will happen soon

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via CAAI

Monday, 24 January 2011 15:01 May Kunmakara

THE Securities and Exchange Commission of Cambodia is set to make a decision “soon” on what currency firms will use to list on the exchange, after holding a public consultation on its choices.

Some 200 attendees attended a consultation at the capital’s Phnom Penh Hotel on Friday to voice opinions for CSX listings in dollars, riel, or both currencies.

“After we receive some input, we will have a meeting with Keat Chhon, chairman of the SECC, for approval,” said Ming Bankosal, director general of the SECC.

“It won’t take a long time to decide – it will happen very soon.”

The exchange is set to launch in July, after being twice postponed.

During the meeting, opinions were mixed. Several government officials voiced support for the riel, while private sector stakeholders generally came out in support of the dollar.

Ming Bankosal said Cambodia was keenly aware of the lessons of the 1997 Asian financial crisis, which had destabilised regional economies following the collapse of the Thai baht.

“The government wants to support our currency sovereignty for the country – we have the monetary authority to manage our currency,” he said. “Our policy is to strengthen the use of the Khmer riel.”

However, a survey posted on the SECC’s website saw support split between the three currency options. Some 32 percent of respondents had called for use of the dollar, 21.5 percent supported the riel, and 28.5 percent said they would prefer listings in both currencies. The remaining respondents had chosen “neutral”.

Phan Ying Tong, country head of the Kingdom’s largest bank Cambodia Public Bank, said on conference sidelines that the bank would support the government’s choice, adding there were many factors besides currency risk to consider.

“Every investor has their own risk portfolio - how much they want to expose to Asia and this country or others – they don’t only look at the currency. They look at your compliance, good governance, professionalism, reputation. These are all the important factors,” he said.

Meanwhile, Han Kyung-tae, managing director of approved underwriter Tong Yang Securities Cambodia, said he supported initial listings in dollars.

“We should start with the US dollar first, and then with long term planning we can develop the local currency and the economy,” he said.

The firm’s parent company Tong Yang Securities had previous experienced currency risk first-hand, he said, adding it had suffered significant losses in Vietnam “purely because of the depreciation of the Vietnamese dong in this market – not because of the Vietnamese economy”.

He said the government would likely face risks if they chose the riel rather than the dollar. “If they [the SECC] prepare for handling these risks, then they can consider the riel,” he added.