VietNamNet Bridge – The demand for low denomination banknotes has increased sharply ahead of Tet (lunar New Year), causing a headache for both banks and the public, but playing into the hands of black market traders.


People wait to get low-denomination banknotes from a black market trader in Ha Noi. Low-denomination notes are used during Tet as lucky money to give to children, friends and the elderly. (Photo: VNS)
Nguyen Thanh Lan of Long Bien District said she needed VND500 (US$0.025) and VND1,000 ($0.05) notes to offer at Buddhist altars but after going to three banks, she was still unable to find them.


Cashiers from banks including Maritime Bank and Vietcombank also told Viet Nam News that they had been unable to change money since last week because of the limited amount released by the State Bank of Viet Nam.


Only regular clients and bank staff had access to the service.


Low denomination notes are used during Tet as lucky money to give to children, friends and the elderly in the belief they bring wealth, health and luck.


Le Dinh Nham, deputy director of Ha Noi-based Agribank, said that for the last month, the bank had been exchanging small notes for the public, but it had got to a point where they had started to prioritise who were eligible.


Nguyen Chi Thanh, director of the State Bank of Viet Nam's Issuance and Vault Department, said besides accommodating the demand for cash at the year-end, the central bank would also issue new bills including low denomination notes.


However, the high demand for the notes would put pressure on the banking system and when Tet finished, there would be imbalanced cash circulation, Thanh said.


While banks are failing to meet the demand, black market trade is booming.


Popular spots to exchange currency in Ha Noi include Hoan Kiem District's Nguyen Xi Street and Dinh Liet Street.


Smaller bills are proving more expensive, with on average a 20-30 per cent mark up.


Online money exchange


Tran Anh Tuan, a student of the University of Natural Science, launched a website that offers money exchange services in Ha Noi, HCM City and other provinces last year, www.doitien.vn.


His fees range from 4 to 55 per cent of the transaction value depending on the denomination of the notes.


"On average, I earn VND15-20 million ($750-1,000) each month," Tuan said.


He employs 20 students to deliver the cash and also employs more students to collect small value banknotes at universities.


In the lead up to Tet, Tuan said there were days when he exchanged up to VND2 million ($102) for each client.


VietNamNet/Viet Nam News