Why are my dollar bills rejected in Vietnam/Cambodia ?

On a recent trip to Vietnam and Cambodia (Nov/Dec 2023) we had a few problems with changing our dollars.

On our first day in Hanoi, we went to pay our guide, and he rejected about 25% of the dollar bills we attempted to give him, saying they were too old, or that they were marked (one $50 bill had a red pen mark on it) or too crumpled. As far as we could tell, any dollars that were well used (so very crumpled), had a stain or mark, or were old (2003 series notes or older) were rejected. People would finger the bill, checking it to see how new or smooth it felt. If they were unhappy they handed it back, shaking their head.

Later that day we went to the bank to change dollars to Vietnamese Dong and they also rejected the same bills our guide rejected.

In some places the shops and restaurants seemed less picky, but it feels like a lottery. I asked our guide how he determined which ones were acceptable or not and he said ‘experience’ - he is starting to understand which bills businesses and banks will accept or reject, but he doesn’t really understand what is going on. He thinks that this ‘pickiness’ with dollars is new since the pandemic (I’m not convinced - see below). Some of the dollars which were rejected were currency we took out from a UK bank a week before the trip.

In Phnom Penh, one of our party took dollars out from an ATM, and was given a $100 bill by the ATM with a slight stain on it, which was rejected the next day at the ticket office for the Killing Fields. Oddly, the same bill was accepted at the genocide museum in Phnom Penh a few hours later, so there is a lot of inconsistency about this.

If you look around on the internet there are various explanations - possibly this Quora article is most helpful. Among the reasons given are:

• banks don’t want to undertake the task of the exchange of the damaged bank notes;
• in Cambodia and Laos there are no U.S. Federal Reserve branches where banks can exchange damaged U.S. bills for new ones, and they won’t accept a bill they would not hand out to another customer;
• one of the tricks used to pass counterfeit bills is to make them look worn so that the difference in texture cannot be readily felt or seen, so they reject these just in case;
• Cambodia is in the middle of a de-dollarization campaign, and small US notes are being phased out of circulation;
• Trip Advisor post - #8 in this thread: “Despite what others have posted you will quickly find out about notes and their acceptability. “Old” notes as in aged and old series, “small head” notes are those given first to tourists as change as a means of disposing of them as “old” small head series notes are where the majority of forgeries are to be found as many tourists find out on their return home on cashing in of notes gained overseas. As a store of wealth, Khmers merchants and individuals only want New Series, Large Head notes and in best possible condition.”

It would therefore seem sensible to specifically ask your bank for only new notes when you take dollars out for a trip to Vietnam or Cambodia.