People exchange high denomination notes for smaller ones in front of the Tran Temple in Nam Dinh Province. (Photo: VNA)Hanoi (VNA) - You want to change 100,000 VND into smaller denominations, so you pay 150,000 VND, a 150 percent commission or “service charge.”
This strange phenomenon becomes almost normal at this time of the year, as the demand for “lucky money” increases.
The demand for small denomination notes to be given as “lucky money” soars as Tet (Lunar New Year) approaches, and with it, the likelihood of excessive commissions for getting them.
The money exchange service offered in the capital city, on typical streets like Nguyen Xi and Ha Trung, has already begun to bustle.
The service providers maintain this informal market meets real demand among people for new small denomination notes.
They also say that the smaller the denomination, the higher the “service charge.” The smaller denominations range from 500 VND to 20,000 VND.
The word on the street is that the charges are higher than last year.
"The lowest fee is between four and five percent for 50,000 VND notes, but it may reach 70-80 percent with 500 VND,” a currency shop owner on Ha Trung street said.
In order to exchange 1 million VND (44 USD) for 10,000 VND notes, customers would have to pay between 100,000 VND and 120,000; or 160,000-200,000 VND for 2 million VND (88 USD) of 20,000 VND notes, she said. She claimed that it might cost nearly 800,000 VND (35 USD) to get 1 million VND of 500 VND notes.
Many online websites are now offering the same service with service charges ranging from 5 to 12 percent depending on the denomination.
Due to high demand, the charge for 500 VND denomination is up to 150 percent in some cases, it is reported
The money exchange service is provided by shops offering items of worship near big pagodas all year round.
The popular practice of giving lucky money to children during the Lunar New Year holiday and of making offerings at pagodas has made the service quite popular.
Nguyen Thi Truc, a resident of Hanoi’s Dong Da district, said her family often went to the pagodas on the first days of the New Year, so she has started buying new banknotes weeks before Tet.
“Over the past few years, there has been a short supply of new, small notes as the central bank has not printed notes of denominations under 5,000 VND; but they are always available at shops near pagodas,” she said.
She herself makes her purchases at a currency shop on Ha Trung street, Truc said.
The note exchange service has also begun bustling in HCM City, with little more than a one month to go before Tet.
Many people have started visiting currency exchange shops on Su Van Hanh street in district 10 or Nguyen Oanh in Go Vap district to buy new notes.
Here too, the lowest fee is 4-5 percent for 50,000 VND notes and 70-80 percent for 500 VND notes. These charges will get even higher as the festival draws closer and prices then fluctuate within a day, the owner of a currency shop in district 10 said.
The store charges 10 percent in the morning for its service, but it can be 12 percent in the afternoon if there is a supply shortage, she said.
Notes in high demand are those of small denominations, like 5,000 VND, 10,000 VND and 20,000 VND, she added.
This year, demand has also increased greatly for 2 USD notes printed with an image of a dog – the zodiac animal for the coming Lunar New Year.
A service provider on district 10 said the 2 USD notes with the image of a dog were selling for 349,000 VND (15 USD).
Besides, an Australian coin with the image of Queen Elizabeth II and the image of a dog are also in high demand. The price is 200,000 VND (9 USD) for a gold coin and 150,000 VND (6.6 USD) for a silver coin.
Pham Bao Lam, General Director of the Issue and Vault Department under the State Bank of Vietnam, said that as of November 2017, the department has supplied its branch in HCM City with notes of denominations over and under 10,000 VND worth 33,500 billion VND (1.47 billion USD) to stabilise the cash flow in the market.
In a bid to secure the supply of cash for Tet, the central bank has already reviewed demand in every district to ensure that commercial banks have enough in stock, said Nguyen Hoang Minh, deputy director of SBV’s branch in HCM City.
Prime Minister’s Instruction No 48/CT-TTg issued last week asks the State Bank of Vietnam to coordinate with ministries, agencies and localities in regulating and ensuring sufficient cash supply in the economy, especially during Tet season.
The SBV should direct credit institutions to ensure stable, safe and smooth operation of ATMs, electronic payment systems and payment for production, business, import and export activities, the instruction says.
The central bank is also asked to work with competent agencies to strengthen inspection and timely handling of violations in the purchase and sale of foreign currency, gold and note exchange services.-VNA
VNA
