Page 1 of 2

KHR fixed term deposit

Posted: Tue Apr 06, 2021 11:44 am
by daeum_tnaot
Hello everyone,

I am considering making a fixed term deposit in Khmer riel as opposed to USD. One MFI is offering about 1% more interest if it is in KHR. In the past I never would have thought much about this, as the exchange rate has been stable.

However, I note the taking USD 1 and $5 out of circulation. Others have also reported that some banks now are not offering less than $50 bills at ATMs. I am wondering whether this may point to a trend. I would expect that if Cambodia threatened to delink the Riel from the dollar that it would lead to a devaluation of the riel.

Does anyone have any thoughts on the relative risks of term deposit in KHR vs. USD?

Re: KHR fixed term deposit

Posted: Tue Apr 06, 2021 2:35 pm
by Pseudonomdeplume
I had just finished my reply and I lost my connection. No automatic draft.
Busy now so try to get back to you later but, in the name of brevity, apart from this being a time of somewhat uncertainty with the rebuild, I think you answered your own question.
Did you mean "I am reconsidering..."?

It doesn't seem to be a "scary" uncertainty though, with investors getting a confidence boost from a strong economy and relaxed domestic travel in the US, for the vaccinated. This was translated onto the stock market, positively.

There's a bunch of opportunities before a bounce, but companies can go out the back door as well, as unwell.

What's the rate, and how long is the term?
You want your money close?
You obviously don't need fast access.
What else do they offer over here?

High yield savings accounts are a way to go, and profitable too, particularly your compounded interest.

It's not a bad idea to keep your money close though, as account access can be difficult offshore (who cares? you're planning to ride out any storm, anyway), as is the case with Marcus by Goldman Sachs High Yield Online Savings, despite it being one of the best, if not the, for savings and checking accounts - irrelevant, in your scenario. Ally Online Savings Account has easy access to your cash - n/a.
Vio Bank High Yield Online Savings Account and Synchrony Bank High Yield Savings, offer a high APY.

There's also been an influx of new retail investors on the markets, and where there's a lot of them you, and they, can make money because they're all making the same mistakes, and investor psyche becomes another content of your analysis. You just get in early, on the rumor, and out first. Ah, Ok.

They should teach much more of this in schools.

No glasses, so used speech to text, for most part - probably errs. I'd say you're adept at decipher by now.
Lucky that was the cut version. Talk cents later.

Re: KHR fixed term deposit

Posted: Tue Apr 06, 2021 3:20 pm
by samrong01
The relative risk of USD against KHR is an interesting question. If you are investing in Cambodia the institutional risk is the same regardless of currency. What then is the relative sovereign risk? Cambodia is a small corrupt country with few resources and has recently destroyed its tourist industry which was perhaps 20% of its economy. Because of this you can get higher interest on their currency reflecting the higher sovereign risk. The USA is a powerful country with massive resources. It is unlikely their currency will totally collapse although it may depreciate due to recent massive money printing. So if you are worried about disaster then USD is better, however if you think that the future prospects for Cambodia are bright you might like to take a punt on KHR (If you think future prospects for Cambodia are bleak then do not touch KHR). But above all the institutional risk is the same if you deposit in Cambodia - if the institution fails then it will not matter which currency you selected.

This is a pretty simplistic analysis and I think what you really want to know is if the KHR is likely to appreciate against the USD. I suggest there is a fair chance it might with the US printing so much money but I would assess the risk of taking a punt on that as high. It really comes down to your own personal assessment. Everyone has their own opinion about the future - some are right, some are wrong.

Re: KHR fixed term deposit

Posted: Tue Apr 06, 2021 6:15 pm
by Clutch Cargo
samrong01 wrote: Tue Apr 06, 2021 3:20 pm Cambodia is a small corrupt country with few resources and has recently destroyed its tourist industry which was perhaps 20% of its economy. Because of this you can get higher interest on their currency reflecting the higher sovereign risk.
And other Asian countries are not and similarly, didn't..to use your words..'destroyed their tourist industries'? :please:

FYI you could get higher interest rate on riel vs USD pre the Wuhan virus...so no, that's not the reason.

You really have a barrow to push haven't you? :wtf:

Re: KHR fixed term deposit

Posted: Tue Apr 06, 2021 6:46 pm
by samrong01
clutchcargo wrote: Tue Apr 06, 2021 6:15 pm
samrong01 wrote: Tue Apr 06, 2021 3:20 pm Cambodia is a small corrupt country with few resources and has recently destroyed its tourist industry which was perhaps 20% of its economy. Because of this you can get higher interest on their currency reflecting the higher sovereign risk.
And other Asian countries are not and similarly, didn't..to use your words..'destroyed their tourist industries'? :please:

FYI you could get higher interest rate on riel vs USD pre the Wuhan virus...so no, that's not the reason.

You really have a barrow to push haven't you? :wtf:
You completely miss the point. Cambodia has been a small corrupt country with few resources for decades and remains so. The destruction of the tourist industry is just a further burden to carry. It is Cambodia's overall situation which causes the higher sovereign risk. I suppose I should have said "these" instead of "this". Not everything is about the virus.

Re: KHR fixed term deposit

Posted: Tue Apr 06, 2021 6:58 pm
by Kammekor
Personally I wouldn't exchange a large sum of USD into riel for an extra 1% on my interest. First of all I would lose money on the exchange to riel, second I would lose on the exchange back to USD and then there's the risk of the riel depreciate against the USD. If the banks offer 1% extra on riels you know for sure they consider those costs and risks higher than 1%. They're not out there to make you rich, but make money themselves.
Maybe you could beat their calculations with luck, but I wouldn't rely on that.

Re: KHR fixed term deposit

Posted: Tue Apr 06, 2021 8:33 pm
by Clutch Cargo
samrong01 wrote: Tue Apr 06, 2021 6:46 pm
clutchcargo wrote: Tue Apr 06, 2021 6:15 pm
samrong01 wrote: Tue Apr 06, 2021 3:20 pm Cambodia is a small corrupt country with few resources and has recently destroyed its tourist industry which was perhaps 20% of its economy. Because of this you can get higher interest on their currency reflecting the higher sovereign risk.
And other Asian countries are not and similarly, didn't..to use your words..'destroyed their tourist industries'? :please:

FYI you could get higher interest rate on riel vs USD pre the Wuhan virus...so no, that's not the reason.

You really have a barrow to push haven't you? :wtf:
You completely miss the point. Cambodia has been a small corrupt country with few resources for decades and remains so. The destruction of the tourist industry is just a further burden to carry. It is Cambodia's overall situation which causes the higher sovereign risk. I suppose I should have said "these" instead of "this". Not everything is about the virus.
You're right, not everything is about the virus. Yet, by virtue of you mentioning 'the destruction of their tourist industry'.. and by referring to it as a 'further burden' to overall sovereign risk, you are implying that government action around covid has somehow added to the riel/USD term deposit differential.

Let me put it to you another way. Riel deposits in all the time I've been here have always attracted a higher interest margin than USD deposits. Happy to be proven wrong but have you got any evidence to suggest that the higher riel margin for term deposits has changed since covid and is somehow due to the local authority's treatment of Covid? If so, provide the evidence. Otherwise, it's your speculation in my book and there was no need to mention Cambodia destroying their tourist industry. Thailand, Vietnam and others are all in the same boat in this regard so I think you're just pushing an agenda.

An agenda that is evident when one looks at your posting history. For example, you previously claimed that government action has no effect on the progress of Covid by selectively quoting one part of a study out of context.. Yet, when myself and others bring you to account on that you come up with denials and excuses.

You're entitled to put forward your views here but if you cannot back up those views in a substantive way, then, you can expect members to continue to challenge those assertions for evidence. Otherwise, it's tantamount to misinformation in my view.

Re: KHR fixed term deposit

Posted: Tue Apr 06, 2021 9:21 pm
by AndyKK
daeum_tnaot have you anywhere in mind, I too am considering putting some savings with a closer hand on, obviously that would be accessible after a fixed period of time.

The following is about De-dollarisation

De-dollarisation ‘will give nation greater control over monetary policy’


Dr In Channy, chairman of the Association of Banks in Cambodia and also the chief executive officer of ACLEDA Bank, in an exclusive with Khmer Times’ Sok Chan marking the 41st anniversary of the reintroduction of the riel, spoke about the banking industry. He discussed the challenges it faces plus the cohesive and coherent efforts to bolster the riel as well as the much-talked-about de-dollarisation issue. The following are excerpts of the interview.

KT: What has ABC been working on with its members to bolster the use of the riel in the country and financial inclusion in the Kingdom?

IC: In the past year, the banks have strongly supported following the NBC’s lead in encouraging customers to use the riel [KHR]. Throughout Cambodia, there are more than 3,100 ATMs in place and a large majority of those offer their services in KHR. Banks also have significantly increased the KHR-denominated share of their outstanding loan portfolios. While banks are offering high interest rates on depositor’s savings, KHR loans are offered at similar rates as foreign-denominated loans. Only four years ago, in early 2017, just 1 percent of all outstanding credit was denominated in KHR. The financial sector has increased that share to 11 percent as of 2021.
Besides bolstering KHR on the financial institutions’ balance sheets, the ABC, as well as the Cambodia Microfinance Association (CMA), have strongly increased efforts to increase financial awareness in the country. ABC members have shared various educational videos and other materials in the Khmer language throughout the extensive social media networks of all ABC members. Furthermore, their involvement in activities and workshops has been intensified across the board.

For example, workshops supported by ABC include ones on financial awareness. The ABC and its members actively support the NBC as well as relevant government bodies, such as the Ministry of Women’s Affairs, in conducting workshops on financial awareness. As of now, such workshops have been conducted in four provinces, Siem Reap, Preah Vihear, Kratie and Steung Treng. Banking and Microfinance in Cambodia workshops have been conducted eight times in Mondulkiri, Banteay Meanchey, Battambang, Ratanakiri, Siem Reap and Steung Treng provinces. More than 1,000 participants were reported as attending those workshops.

https://www.khmertimeskh.com/50833332/d ... ry-policy/

There's plenty more on the subject and more articles too.

Re: KHR fixed term deposit

Posted: Tue Apr 06, 2021 9:57 pm
by samrong01
clutchcargo wrote: Tue Apr 06, 2021 8:33 pm
samrong01 wrote: Tue Apr 06, 2021 6:46 pm
clutchcargo wrote: Tue Apr 06, 2021 6:15 pm
samrong01 wrote: Tue Apr 06, 2021 3:20 pm Cambodia is a small corrupt country with few resources and has recently destroyed its tourist industry which was perhaps 20% of its economy. Because of this you can get higher interest on their currency reflecting the higher sovereign risk.
And other Asian countries are not and similarly, didn't..to use your words..'destroyed their tourist industries'? :please:

FYI you could get higher interest rate on riel vs USD pre the Wuhan virus...so no, that's not the reason.

You really have a barrow to push haven't you? :wtf:
You completely miss the point. Cambodia has been a small corrupt country with few resources for decades and remains so. The destruction of the tourist industry is just a further burden to carry. It is Cambodia's overall situation which causes the higher sovereign risk. I suppose I should have said "these" instead of "this". Not everything is about the virus.
You're right, not everything is about the virus. Yet, by virtue of you mentioning 'the destruction of their tourist industry'.. and by referring to it as a 'further burden' to overall sovereign risk, you are implying that government action around covid has somehow added to the riel/USD term deposit differential.

Let me put it to you another way. Riel deposits in all the time I've been here have always attracted a higher interest margin than USD deposits. Happy to be proven wrong but have you got any evidence to suggest that the higher riel margin for term deposits has changed since covid and is somehow due to the local authority's treatment of Covid? If so, provide the evidence. Otherwise, it's your speculation in my book and there was no need to mention Cambodia destroying their tourist industry. Thailand, Vietnam and others are all in the same boat in this regard so I think you're just pushing an agenda.

An agenda that is evident when one looks at your posting history. For example, you previously claimed that government action has no effect on the progress of Covid by selectively quoting one part of a study out of context.. Yet, when myself and others bring you to account on that you come up with denials and excuses.

You're entitled to put forward your views here but if you cannot back up those views in a substantive way, then, you can expect members to continue to challenge those assertions for evidence. Otherwise, it's tantamount to misinformation in my view.
Yes I know riel deposits have always had higher interest rates. I have never said the rates changed after the start of the coronavirus hysteria. The OP asked about the relative risks of investing in KHR against USD. I listed a number of risks including the destruction of some 20% of the economy which is a significant risk factor for future exchange rates. The virus is not a significant risk factor but the loss of a major section of the economy is. There are in fact many more risk factors but I tried to simplify and mention only the larger and publishable risks. Thailand and Vietnam are irrelevant when discussing the relationship between KHR and USD.

You are stating that I selectively quoted a study out of context when in fact I quoted the conclusion of the study and provided a link to the whole study. It is others who have quoted out of context. Surely it should be obvious by now that after over a year of government measures worldwide that the virus is still here. Perhaps it is time to consider whether or not these repeated measures achieve anything. I do not see any evidence provided by yourself or others to support your opinions yet I have submitted reports and studies to support my statements. Your statement that I provide misinformation is outrageous - can you give a single example? Such a discussion should be on another thread.

Re: KHR fixed term deposit

Posted: Tue Apr 06, 2021 10:28 pm
by Clutch Cargo
samrong01 wrote: Tue Apr 06, 2021 9:57 pm I have never said the rates changed after the start of the coronavirus hysteria.
samrong01 wrote: Tue Apr 06, 2021 3:20 pm Cambodia is a small corrupt country with few resources and has recently destroyed its tourist industry which was perhaps 20% of its economy. Because of this you can get higher interest on their currency reflecting the higher sovereign risk.
Says it right there..