Friday, November 03, 2006

Dirty dollar

On page one of the Wall Street Journal today (unfortunately, subscription required), is a piece titled "Dollar Isn't Always Good Overseas."

It talks about how older U.S. currency, such as the 1996 Sec. Robert Rubin $100 bill, is worth less in certain parts of the world than the more curent Sec. John Snow bill (is a Sec. Henry Paulson bill out yet?), because both black market money changers and banking institutions have difficulties in turning around and selling older bills. Discounts can be 10-15% of the face value. Some places also didn't like small denominations because all that counting wasn't worth their time.

Those who are hurt by this include cruise ship workers who are sometimes paid in older bills. Former Sec. Rubin is quoted as wanting in on this arbitrage opportunity - unfortunately, the little guy on the street has much fewer options.

The piece also mentioned a U.S. traveler who experienced similar issues when she headed to Thailand with older bills. I haven't heard of anything similar in Vietnam, though Thirsty did mention that the Dollar-Dong exchange rate differed based on the denomination of U.S. currency one submitted.

Finally, in an aside that may only interest me, the piece noted that of the 5.5 million $100 U.S. notes in circulation, about 75% are circulated outside of the United States. Dovetails in with that remittances post earlier. Woohoo, free money for our government!

3 comments:

HmL said...

Actually, I can testify to the fact that a $100 bill can exchange for more "đồng" than, say, ten $10's or five $20's...

the issue, i think, is portability...

layered said...

In my experience in SE Asia including China, they also do not take bills with any markings on them. In America, banks and businesses put marks on bills all the time without a thought since Americans have no problem exchanging such marked bills. In Asia, however, they are rejected. Everytime we have gone to the Bank of China here in HCMC with new U.S. bills, about 20 to 25% of the bills are rejected for being too old, too wrinkled, or marked up (even for one small mark). When you come to Asia, be sure to get all new crisp bills from your bank.

D. said...

Mel:

How are the banks with U.S. checks? Can one easily write a check to open up an account over there? I think I'll rather transport the money electronically.