Why you need US dollars when travelling in Asia

What, you've bought a load of dollars to go to Asia? Don't you know dollars are for America? Every Asian country has its own currency — just use an ATM!

That's the reaction I usually get. And on paper it's right: every country in Asia has its own currency, and the cheapest way to get hold of it is almost always a local ATM, not an exchange booth. So why carry greenbacks at all? Because the US dollar is the closest thing the planet has to a universal backup currency, and in this part of the world that matters more than you'd think.

When dollars beat the ATM

True — I can withdraw local cash from ATMs without fees thanks to the NX Mastercard (for more on getting the right plastic, see stop paying currency exchange fees when you travel). But there isn't always an ATM in sight. You can't assume there's a bank on every corner.

In many situations there'll barely be any option to exchange foreign currency except at some makeshift stall in the middle of nowhere, at an unfavourable rate. In those cases dollars come in handy — you can exchange a small amount to tide you over, and use the notes directly for anything where they're accepted and it makes sense. Picture the classic awkward moments:

• You land overland at a quiet border post with no ATM and a money-changer who'll happily take dollars but sniffs at anything else.
• The one cash machine in town is out of order, out of cash, or eats your card.
• You arrive somewhere late, skint of local notes, and need to pay for a bed or a ride tonight.

In all of those, a few clean dollar bills are a get-out-of-jail card. In parts of Cambodia, in fact, the US dollar is used as everyday cash right alongside the local currency.

Dollars for visas

The other reason to carry US dollars is visas. At many embassies and border crossings the dollar is the only currency accepted; at others the euro-to-dollar exchange rate is treated as 1:1, meaning you save a significant amount by paying in dollars (or lose a significant amount if you pay in euros). Visa-on-arrival counters across Asia are notorious for wanting crisp, recent, unmarked dollar notes — and for having no change. Turn up with the exact fee in good condition and you skip a lot of hassle. The same logic applies well beyond Southeast Asia: it's exactly how things work at plenty of land borders further west, like getting the Iran visa.

How many dollars, and in what denominations

After asking about rates at half a dozen banks, the best rate I found was at Santander, so that's where I bought $600. I managed to get most of it in small bills, which are far more practical than large ones — among other reasons because the risk of receiving counterfeit notes is real in some places, and paying the right amount means you won't have that problem.

A few rules of thumb that have served me well:

• Buy them before you fly, comparing rates at a couple of banks — exchanging at the airport on either end is the most expensive way to do it.
• Favour small denominations (singles, fives, tens, twenties) so you can pay close to the exact amount and aren't relying on the other side having change.
• Insist on clean, new-ish notes. Across much of Asia, dollars that are torn, scribbled on, or from older print series get refused or heavily discounted.
• Treat them as a buffer, not your main money. Day to day you'll still get local cash from ATMs at a better rate; the dollars are there for the gaps. They also double as a discreet emergency reserve, kept separate from your main wallet.

If you want the wider picture on sorting your money before a big Asia trip, I went deeper in preparing for Asia: sorting the money, and on haggling once you're there in the definitive trick to paying local prices.

Frequently asked questions

Do I really need US dollars in Asia if I have a card?

For everyday spending, no — a good fee-free card and local ATMs will cover most of your trip more cheaply. But dollars are the backup that saves the day when there's no ATM, the machine is broken, or a border or visa counter only takes greenbacks. Think of them as insurance, not your primary cash.

Why do borders and visa counters insist on new, clean dollar bills?

Because counterfeit and damaged notes are a real problem, so officials and changers protect themselves by only accepting crisp, recent-series bills. Old, torn or marked notes are routinely rejected or exchanged at a worse rate, so ask your bank for the newest notes they have.

Where do I get the best rate on dollars?

Usually at a high-street bank in your home country, after comparing a couple of them — not at the airport, and not at a destination exchange booth. Order ahead if you want specific small denominations.

Is it safe to carry that much cash?

It's fine if you're sensible: split it up, keep most of it hidden separately from your day wallet, and only carry what you need on you. The dollars are partly there because cash can be safer than relying on a single card that might get blocked, lost or swallowed by a machine.

Would it bother you to walk around with $600 in your pocket?