Cambodia operates on a dual currency system, where both the Cambodian Riel (KHR) and the US Dollar (USD) are widely accepted. This unique system allows for financial flexibility but also presents challenges for both locals and foreigners navigating daily transactions. The Riels are basically treated as change, while the Dollars are treated as bills. This can be great, as I never carry any change, but can also be confusing.
How Cambodia’s Currency System Works
The Riel is Cambodia’s official currency, but the US Dollar dominates many transactions, especially in urban areas like Phnom Penh and Siem Reap. Typically, larger expenses such as hotels, restaurants, and tour packages are priced in dollars, while smaller transactions like street food and tuk-tuk rides are quoted in Riel. The exchange rate hovers around 4,000 KHR per 1 USD, though slight fluctuations occur.
Why Cambodians Prefer Clean, Crisp US Dollars
One of the most frustrating aspects of Cambodia’s currency system is the strict standard for US bills. Many Khmer people will refuse to accept US Dollars that are torn, excessively creased, or even slightly stained. Even a small mark can make a bill unacceptable in many shops and markets. I was once given a $5 by a waitress that no one in town will accept. It has been almost a year and its just sitting on the shelf.
ATMs in Cambodia sometimes dispense worn or slightly damaged US bills, yet banks often refuse to exchange them back. This can leave travelers stuck with unusable cash.
To avoid issues, always check the bills you receive and politely request a replacement if they appear damaged. When withdrawing cash from an ATM, inspect the bills immediately. If they are in poor condition, try using them at larger businesses or international chains first, as they are more likely to accept them.
Where to Exchange Money in Cambodia
Money exchanges are widely available, and most offer competitive rates. Some recommended places for exchanging money include:
- ACLEDA Bank (ACLEDA)
- Canadia Bank (Canadia Bank)
- ABA Bank (ABA Bank)
- Local exchange shops, which often provide better rates than banks
Challenges and Tips for Handling Money in Cambodia
- Small Change in Riel: When paying in US Dollars, expect to receive change in Riel for amounts less than $1. This means you’ll likely end up carrying a mix of both currencies.
- Avoid Damaged Bills: Always inspect your money when withdrawing from an ATM or receiving change from vendors.
- Cash is King: While credit cards are accepted in some high-end establishments, cash is still the preferred method of payment.
- Know the Exchange Rate: While most businesses use the standard rate of 4,000 KHR per 1 USD, some may round up to their advantage, so stay aware of fluctuations.
The Future of Cambodia’s Dual Currency System
There has been a push to reduce reliance on the US Dollar and strengthen the Riel, especially for smaller transactions. However, due to economic factors and convenience, the dual system is likely to persist for the foreseeable future.
For travelers and expats, understanding Cambodia’s unique money system can help avoid frustration and ensure smoother transactions. Always carry crisp US Dollars, have some Riel for small purchases, and stay mindful of exchange practices.