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Local vendors shun small US currency

Harrison White / Khmer Times Share:
Large stacks of $1 notes are proving too costly and difficult for local financial institutions to transport. KT/Pann Rachana

Reports of local vendors refusing to accept small US currency banknotes has continued over the weekend, despite repeated calls from both the Kingdom’s central bank and Prime Minister Hun Sen that all US currency banknotes will still be considered “legal tender”.

The confusion started Friday last week after the National Bank of Cambodia’s (NBC) director, Chea Serey, asked commercial banks and microfinance institutions to send it the small US dollar banknotes because it considers them difficult to manage and “there is little demand for them”.

However, many local street and market vendors have confused the “phase out” with an actual “banning” of the notes as officially recognised tender and have been refusing to accept the bills.

The day after the announcement, Khmer Times visited Phnom Penh’s Kandal Market and spoke to various traders who expressed concerns that they did not want to be “stuck” with the notes after August 31 and feared them being “rendered useless in the coming months”.

“I heard this morning that the government wants to ban the use of small US currency, so I don’t want to be stuck with the banknotes when this happens,” a local vendor said.

“What if the bank and MFIs decide to add the additional cost of transportation that the NBC wants to impose on me when I deposit the notes for my loan?” they added

There have also been widespread reports on social media of gas stations and tuk-tuk drivers refusing the currency from customers, expressing the same concerns.

“Here in Sihanoukville. Many shops are [already] refusing to accept the dollar as legal tender,” a Facebook user commented.

In response, Prime Minister Hun Sen has directly addressed the concerns stating, “I would like to confirm to the Cambodian people that in addition to the NBC announcement on May 28 that the small US banknotes of $1, $2, and $5 is still widely used and accepted across the country.”

“It was not banned as rumoured said,” he added.

“In the event of a halt to the circulation of the said US bills, an official announcement from the National Bank of Cambodia will be released to the public,” Mr Hun Sen said.

“All Citizens, please continue spending freely the said banknotes in the Kingdom without any loss in exchange rates or additional charges,” he added.

According to the official NBC announcement it will give a three-month deadline (June 1 to Aug 31) for all commercial banks and microfinance institutions (MFIs) to collect $1, $2 and $5 bills so it can transport them to a foreign country. There will be no service charge during this period.

The banks’ regulator said after Aug 31, the NBC will transfer the cost of exporting the notes to the commercial banks and MFIs.

It added there will be no charge for accepting $10 notes and it will continue discussing with banks and MFIs to determine the exact date to stop accepting the small US dollar banknotes completely from commercial banks and MFIs.

There have also been widespread reports on social media of gas stations and tuktuk drivers refusing the currency from customers, expressing the same concerns.

“Here in Sihanoukville. Many shops are [already] refusing to accept the dollar as legal tender,” a Facebook user commented.

In response, Prime Minister Hun Sen has directly addressed the concerns stating, “I would like to confirm to the Cambodian people that in addition to the NBC announcement on May 28 that the small US banknotes of $1, $2, and $5 are still widely used and accepted across the country.

“It was not banned as rumoured,” he added.

“In the event of a halt to the circulation of the said US bills, an official announcement from the National Bank of Cambodia will be released to the public,” Mr Hun Sen said.

“All citizens, please continue spending freely the said banknotes in the Kingdom without any loss in exchange rates or additional charges,” he added.

According to the official NBC announcement it will give a three-month deadline (June 1 to Aug 31) for all commercial banks and microfinance institutions (MFIs) to collect $1, $2 and $5 bills so it can transport them to a foreign country. There will be no service charge during this period.

The banks’ regulator said after Aug 31, the NBC will transfer the cost of exporting the notes to the commercial banks and MFIs.

It added there will be no charge for accepting $10 notes and it will continue discussing with banks and MFIs to determine the exact date to stop accepting the small US dollar banknotes completely from commercial banks and MFIs.

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