Using scarcity as an excuse, exchanging small change at sky-high prices

Using the excuse that some small denomination bills were not newly printed by the State this year, making them even more scarce, black market bill exchange services are competing to double or triple the price.

Black market changer rips off customers

As soon as she pulled over to the side of Dinh Le Street, Ms. Ha was greeted by a few women who ran up to her and warmly invited her, "Would you like to exchange some small change? We have all kinds of money, and the prices are very reasonable when you exchange a lot."

Expressing her desire to exchange 5,000 VND bills for a religious ceremony and 20,000 VND bills for lucky money, Ms. Ha was offered a price by a broker: New 5,000 VND bills "in original packaging" at a rate of 10 to 8. The 20,000 VND bills are cheaper, at a rate of 10 to 9.

Fees for exchanging small denominations of money are higher than last year. Illustrative photo

A woman named Hang, who has been in the online currency exchange business for 5 years, said that the current exchange rate is quite high, with a difference in fees that buyers have to pay from 10% - 30%, and the types of money that have stopped being printed, such as 100 VND, 200 VND, 500 VND... their value has increased by 2 or 3 times. In particular, because for the past 2 years the 200 and 500 VND bills have not been newly printed by the State Bank, the exchange fee for these 2 types of money is much higher than other denominations, up to 80%. This means that if you spend 100,000 VND, you will only get back 20,000 VND of 500 VND bills, and the remaining 80,000 VND is the fee.

The larger the denomination, the lower the fee, for example 10,000 VND the fee is 10%, 100,000 VND the fee is reduced to 6%. If customers exchange in large quantities or buy wholesale, they will contact directly to get a better price.

In addition to Vietnamese currency, many people have a need to "hunt" for small denominations of dollars to give as gifts during Tet, so in recent years these types of bills have become "rare". Bills with a denomination of 2 USD are currently the most popular, because according to many people, the number 2 is an even number representing a couple, so it always brings luck and a guardian angel.

If last year the exchange rate for each 2 USD note was only 55,000 - 70,000 VND, this year the price has doubled, tripled. Currently, the exchange rate for 2 USD notes this year has reached 140,000 - 150,000 VND/note. If you want to buy 2 USD notes with the old design, beautiful series, four-of-a-kind series... the price ranges from 180,000 - 200,000 VND/note.

“The old $2 bill is very rare now, I only look for it when customers “order” it because the price is high and I don’t want to “hold” too many. The closer it gets to Tet, the harder it is to exchange, and the higher the price,” a person changing small bills on Dinh Le Street told a customer.

Exchanging small change on the black market can result in a fine of up to 40 million VND.

The demand for cash during Tet and New Year often increases very high, Mr. Nguyen Chi Thanh - Director of the Treasury Issuance Department (SBV) said, in order to meet the needs of the people, the SBV has developed a plan and transferred small denomination cash that meets the circulation standards to SBV branches in some large provinces and cities... The money transfer plan will be completed before January 30, 2015.

However, to save costs and limit the misuse of small change in festivals, temples, etc., in 2015, this agency will not put new 5,000 VND notes into circulation.

Although the State Bank of Vietnam has always affirmed that it will provide enough quality money for circulation during Tet, the phenomenon of small change shortage still occurs. Unable to exchange small change in the banking system, people have to resort to money exchange services in the "black market". Therefore, the service of exchanging small change with "exorbitant" prices is still "healthy".

Explaining more clearly why the service of exchanging small bills is still "growing" like mushrooms, customers can exchange as much as they want, the money is always guaranteed to be "original series, original bundle", Deputy Governor Dao Minh Tu said that this amount of money may have been "kept" by the service providers for a long time. "If you keep a few dozen bundles of small bills in the cabinet, the value is not too great, it just takes effort to preserve. But I am sure that if it is a bill worth 500,000 VND, no one would be foolish enough to save it from year to year before spending it. This is difficult to control" - Mr. Tu said.

But unlike every year, this year the Deputy Governor said that the management agency has sanctions in Decree 96 of the Government regulating administrative sanctions in the field of currency and banking, the act of "trading" small change, "smuggling" small change to the black market can be fined up to 40 million VND.

According to Infonet