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Black market for small bills soars   2010-02-09 - Viet Nam News

Demand for new and small bills has risen precipitously before Tet, and many are willing to exchange at an extremely high rate in the black markets because they cannot exchange money through official channels at banks.

 
Pham Thanh Hai from Le Quy Don Street of Ha Noi, who is one of the customers exchanging money on Dinh Le Street, said: "Every year, I need a great amount of change to give out to relatives and my kids as Tet gifts and to donate at temples, so I often come here to exchange money. I don’t want to wait in a long line at the bank for it. You need to have a relationship with the banking staff in order to get it done."

Similar to Hai, Vu Thi Nhan from Lo Duc Street, Ha Noi, said she would rather pay extra money in order to get change at black markets. "I went to several banks, but they said they ran out of small bills. They are waiting for the State Bank to release more new bills," Nhan said.

Mai Thu Cuc, a staff member at the Capital Office of commercial Saigon-Ha Noi bank (SH Bank) on Tran Hung Dao Street of Ha Noi, said that two weeks ago the State Bank had released new bills, but the demand for new bills had already exceeded what had been released.

"We could only provide new bills for our regular customers and staff at the bank. The money from the State Bank could not meet the demand. The staff from our bank is only able to exchange a limited amount of money. Bills like VND10,000 (US$0.55) and VND5,000 ($0.27) are particularly scarce," said Cuc.

Places in Ha Noi that are popular for illegal currency exchanges include Dinh Tien Hoang, Dinh Le streets in Hoan Kiem District, and many stands outside of local temples near Ho Tay (West Lake) and Tran Quoc Temple.

For VND5,000 ($0.27) and VND10,000 ($0.55) notes, customers have to pay VND100,000 ($5.55) for VND80,000 ($4.44) worth of notes. The smaller the value of the note, the higher the exchange rate. For VND500 ($0.03), customers are only able to get VND70,000 ($3.88) back from VND100,000.

According to Nguyen Tat Huynh, deputy head of the Distribution Department at the State Bank, the institution has forecast an increased demand for small bills before Tet.

"We have prepared better this year and provided money worth a variety of values to local banks throughout the year. However, these banks didn’t want smaller bills, instead they preferred VND500,000 ($27.77) and VND200,000 ($11.11) notes. So when Tet approaches, the pressure for small bills has solely been put on the State Bank," said Huynh. The State Bank would provide more money to local banks and require them to continue providing exchange services for customers in need. The Government, however, has not had any fine framework established for dealing with the illegal exchange networks at the black markets.

Dinh Van Muoi, deputy president of the Commercial Bank for Foreign Trade of Viet Nam (Vietcombank), said that the bank gave priority to regular customers, which includes enterprises and their employees. The next priority is given to the bank’s staff and then to individual customers.

"The demand for exchange services near Tet is huge, and we are worried that many people get money from the bank in order to exchange it outside the bank," Muoi said.

According to him, in order to get new bills, banks apply to the State Bank. These banks distribute the bills to their local branches who then decide how to distribute these new notes.



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