Small denominations needed for Tet

The State Bank’s branch in Ho Chi Minh City reportedly pumped a large volume of VND10,000  (0.5 cents)-notes in January against the volume distributed in previous months.

There was around VND828 billion ($41.4 million) of VND10,000 notes being provided to local banks in the city in January compared to only VND105 billion ($5.25 million) issued in November and December.

Local residents traditionally offer family, friends and children “lucky money” on Tet. They often exchange just VND10,000 or VND20,000 notes as the red and blue colour of these notes is considered auspicious.

“Our main duty is to assure cash circulation and structure of denomination notes in the market, therefore, providing new low denomination notes is only part of that, especially Tet holiday,” said Le Thi Thanh Hang, deputy director of the State Bank branch in Ho Chi Minh City.

However, the supply of brand new low denomination notes for this year Tet focused mostly on VND10,000-notes so there is a dearth of VND20,000 notes.

“The fact that we face difficulties in putting this money back into circulation after Tet from local banks given that their customers, both enterprises and individuals do not want to keep low denomination notes but higher value denomination notes such as VND500,000; VND200,000 and VND100,000,” Hang added.

The central bank, meanwhile, reportedly provided local trading halls and supermarkets with lower denomination notes for transactions during the past three months.

The central bank also reported a decrease in Vietnamese dong polymer fake notes in 2010. The confiscated fake notes volume decreased by 43 per cent against the volume in 2009. Most fake notes are VND100,000 and VND50,000.