Thursday, July 1, 2010
The Riel Deal
The national currency in Cambodia is called the riel (pronounced by all the barang as real).
Before I go any further in my post about money in Cambodia, I would first like to point out how awesome it must be to write headlines about money for English-language publications in Cambodia. The potential for puns is just outrageous. Anyway, moving on.
In addition to the riel, USD is also widely used in Cambodia. That's right good old greenbacks. At the current exchange rate $1 USD is worth 4,190 KHR. Prices will frequently be listed in either dollars or riel, but, I have notice, rarely both. With the riel to dollar ratio so close to 4,000 to one a strange sort of phenomena has developed. The dollar has become, well, the dollar and the riel has become the change. 1,000= 25 cents. So if something costs $2.50 you usually pay two dollars and 2,000 riel.
When an economy is using two separate currencies, whose value in relationship to each other fluctuates, things can get a little tricky. Furthermore, it is easy to convert the riel to dollar ratio to 4,000 to one, but that is not completely accurate. It is closer to 4,200 to one (right now, but as I said, it can fluctuate). So if a price is listed as $2.00 and you pay them two dollars you are actually paying them almost 8,400 riel. But if you were to pay them only 8,000 in riel (not dollars), they would most likely accept that too. On the same note, if a price is listed as 4,000 riel and you pay with a dollar, no one i going to give you back those 200 riel in change. So when you pay for prices listed in riel with dollars you loose 200 riel for every dollar and when you pay for prices listed in dollars with riel you save 200 riel. Tricky, tricky. It is to your benefit to pay in riel. Your, tiny, tiny benefit. But those 200 riel can add up over time, right?
On only one occasion did we ever have anyone question this whole accepted 4,000 to one concept. We purchased something at the market for $6 (price agreed on in dollars). Cale gave the woman five dollar bills and 4,000 in riel. She counted the money and explained to him that he still owed her 200 riel because the exchange rate is closer to 4,200 to one. What? No one ever points that out! And there is no way that if the quoted price had been 24,000 riel and Cale had given her $6 USD that she would have given him his change of 1,200 riel. Well, I suppose I cannot say that for a fact. Maybe she is meticulous with the exchange rate going both ways, but no one else is.
In more rural areas you will find that the riel is more commonly used as the currency. Prices in rural areas are lower than in cities and tourist places. It would be hard to use dollars when you are talking about prices of 500 riel and less. The biggest riel note Cale and I have had in our possession is 10,000 (about $2.50), though Cale has seen a 50,000(about $12.50). Rumor has it there are riel coins and Wikipedia seems to agree. However, Wikipedia points out that they are not being produced anymore and no longer in common circulation. I would agree with that, as I have never seen one and prices are such that they would be useless. I have never paid for anything that is less than 100. I think of 100 riel like the penny.
Cambodians are also very particular about their USD notes. They need to be as new and as crisp as possible. When you pay the vendor may inspect your bills, not for fakes, but for any small tears or fold creases. Poor condition bills will be rejected. The new USD notes are adding an interesting element to things as well. It appears the new $5 has been around long enough for it to be accepted. However, I tried to pay with a new $10 at a grocery store and the cashier was having none of it. She asked if I had any other bills, which I did not. She then called over a supervisor, who called over another supervisor. Before it was all over I think everyone in the store had inspected my $10 and asked me if I had another method of payment. I kept insisting it was a real, valid $10 note and that I had nothing else to pay with. Eventually. it was accepted, reluctantly.
Cale and I were give a $2 USD note with a mint date of 2006 as change while in Kampot. Neither Cale nor I could remember if two-dollar bills were still being printed. I remember being given two-dollar notes as presents from my grandparents as a kid, but I haven't seen one in so long. I get the impression that people believe they are collectable. I had no way of knowing if the the US was still printing two-dollar bills as recently as 2006. To be on the safe side we spent the $2 immediately in Kampot rather than risk bringing it home to the States and discover it was fake.
Posted by Cale