Banks are short of small denominations of money, and the black market is charging exorbitant prices.

(Baonghean.vn) -As is customary, during the Lunar New Year, people need to exchange small denominations of money for temple visits and lucky money gifts. This year, the State Bank of Vietnam announced it would stop issuing small denominations under 5,000 dong. Therefore, anyone needing to exchange small denominations must turn to the "black market," even if they have to pay a rate of 10 for 2 or 2.5 (exchanging 100,000 dong costs 20,000 to 25,000 dong), or even 3 times the rate (exchanging 100,000 dong costs 30,000 dong) for 500 dong or 200 dong banknotes with intact serial numbers.

A wide range of currency exchange services.

When I went to Vinh market to exchange money for New Year's offerings, I went straight to the stalls selling paper money. They had all denominations under 20,000 dong, which banks hardly ever had. I asked Mrs. Tam, a veteran vendor of paper money at Vinh market, who said: “Small denomination bills for New Year's offerings, still in their original serial numbers, are extremely rare now. I had to stock up from last year to wait for Tet. Of course, you need to have connections at the bank; you lose 10,000 dong to them and get 15 or 20,000 dong back. Do you want a stack of 2,000 dong or 1,000 dong bills?” When I expressed my desire to exchange 500 dong bills, Mrs. Tam whispered: “To be honest with you, nobody in the market has these 500 dong bills. Only I have a few million dong that I’ve been saving since months ago. If you want to exchange a few, I’ll give you a friendly rate, only 3 (exchanging 100,000 dong costs 30,000 dong)?”

At Cờn Temple, stalls selling small denominations of money were set up at the temple entrance, with women eagerly inviting customers. The most common were 2,000 and 1,000 dong notes, displayed in series, each series containing 200,000 dong. When asked if they had 500 dong notes, the women all said they were out of that denomination. If you wanted to exchange used but "very new" notes, you still had to pay a high rate of 20-25%. For 1,000 dong or 2,000 dong notes, the fee was 20%. Ms. Lài, a long-time "small denomination money dealer," said: "The demand for small denominations this year isn't as high as last year, but there's a shortage of notes under 5,000 dong, so the lower the denomination, the higher the rate." She mentioned that last year, on each "first day of the lunar month," she exchanged about ten million dong in all denominations from 10,000 dong downwards.

Ms. Lai handed over a stack of rare 500 dong bills that she had "collected" from last year.

Needing to exchange small denominations for Lunar New Year lucky money, I asked an acquaintance, Ms. Nguyen Thanh Tra, an employee at Bao Viet Bank. She said: “This year, the bank is very short of small denominations with intact serial numbers. Each of us bank employees only gets 10 20,000 VND notes, and regular customers who want to exchange have to order a month in advance.” Similarly, Eximbank is also short of 20,000 VND and 10,000 VND notes, and especially small denominations under 5,000 VND are completely unavailable for customers who need them for temple visits at the beginning of the year. Ms. Nguyen Thi Ngoc Diep, an Eximbank employee, said: “This year, our branch has a huge demand for small denominations. Most of them are VIP customers of the bank, so when they want to exchange money and we don't have any, we feel very embarrassed. Therefore, we often have to ask the Ha Tinh branch to exchange them for us.”

The cost of exchanging new banknotes on online platforms this year has not increased compared to last year. On websites like 5giay.com, Enbac.com, and quabieusep.vn, customers can exchange any amount they want, including 10,000 VND cotton banknotes which are no longer widely circulated. The fee remains mainly between 10-15%, the same as last year. The fee increases with smaller denominations. For example, exchanging over 2 million VND for a 200,000 VND note incurs a fee of up to 55% of the total amount, while a 100,000 VND note only costs about 4%. US $2 bills are being sold for around 50,000 VND each, with only a few collectible bills priced between 1 million and 2 million VND each.

Going to the bank to exchange small denominations is difficult or only yields very small amounts, while the black market is still overflowing with small bills in the pockets of traders, causing frustration among many people. Ms. Nguyen Thu Trang from Quang Trung, haggling over small bills at Mrs. Tam's stall in Vinh market, said: "The bank says there are no bills under 20,000 dong, yet the market still has plenty; you can exchange as much as you want. Do the bank officials sell money to the black market?"

When this issue was brought up in an interview with the head of the State Bank of Vietnam's Nghe An branch, it was learned that: The bank has sufficient quantities of small-denomination banknotes to meet the needs of customers who want to exchange money at the end of the year. However, dealing with small-denomination banknotes and new banknotes intended for people's spiritual needs is not the bank's responsibility.

Printing small denominations of money is wasteful.

Undeniably, using small change for temple offerings and lucky money is a long-standing tradition of the Vietnamese people; however, this custom is being distorted in many forms. Many people, instead of making donations to temples for construction or support at the beginning of the year, are using small change to...scattering moneyThey're everywhere. They stuff money through cracks in the doors of temples, into the ponds within the temples, under the limbs of Buddha statues, at the base of trees... it looks very unsightly.

Small denominations of money are also used in many forms, such as scattering money to ward off bad luck on wedding days, if two weddings meet, or if the bride's car passes through intersections. Any family with a baby celebrating their first month or bringing their child home from the hospital will also scatter stacks of small bills at intersections. It's impossible to control all the long-standing customs and traditions of the people, but printing small denominations of money to serve spiritual needs will create opportunities for some private traders to profit from money exchange services during the New Year.

Let's do a calculation: if, during the New Year, a household exchanges 200,000 dong in 2,000 dong or 1,000 dong notes to offer at temples, costing 40,000 dong, then the entire city of Vinh, with over 300,000 people, would spend more than 120,000,000 dong – a considerable amount. Therefore, the State Bank of Vietnam's decision not to print small denomination banknotes during the Lunar New Year of the Year of the Snake (2013) has been widely supported. According to economic experts, the use of low-denomination banknotes under 2,000 dong is currently mainly for temple offerings and rarely used in circulation or for payments.

Text and photos: Thanh Nga