How dealing with low-value currencies makes accounting unwieldy

23,200 đồng to one U.S. dollar, the exchange rate of the second-lowest valued circulating currency in the world.

When the value of a local currency falls due to inflation, people will see bigger and bigger values in an accounting context in their lifetimes. In extreme cases, they will see bigger values and even digits added in a few years. When it starts getting unwieldy, the central bank usually eliminates the subdivisions of a currency to temporarily ease calculations in accounting. When the value of the currency continues to fall, it will eventually get unwieldy to make calculations in accounting.

This is why central banks have redenominated their currency several times so that accounting is done easier and faster. First, they announce that a number of zeros (usually a multiple of three) will be removed from the currency. Then they release the new denominations of the currency in coins (if any) and banknotes. Once the new currency enters circulation, the central bank announces that the old denominations can continue to be used for a limited time. Once the old currency denominations have been demonetized, the newer, more valuable currency now powers the economies using the currency.

Here is a list of some low-value currencies:

• Iranian rial: The official rate is 4200 tomans (42,000 rials) to one U.S. dollar, while the parallel exchange rate hovers around 12,300 tomans to the dollar. The Iranian people refer to ten rials as a toman.
• Vietnamese đồng (pictured above): The exchange rate stands at 23,200 đồng to the greenback in the socialist state.
• Indonesian rupiah: The exchange rate set by the central bank on February 15, 2019: Rp 14,116 to the U.S. dollar.
• Venezuelan bolívar soberano: The official exchange rate is Bs.S 3,298.45 to the U.S. dollar. The central bank carried out the redenomination on August 20, 2018, reducing 100,000 old bolívares into one bolívar soberano. This temporarily eased transactions, until two zeros went back in prices after five months. Presently, Venezuela is having two recognized heads of state.
• Colombian peso: Being the only large Latin American economy not to have redenominated their currency in the past century, the exchange rate stands at 3,141.40 pesos for one American dollar.
• Ugandan shilling: The Ugandan economy has a GDP of a hundred trillion shillings! But the currency's exchange rate is 3,669 shillings to one U.S. dollar.
• Tanzanian shilling: The rapidly growing economy in eastern Africa has to deal with an exchange rate of 2,330 shillings to the dollar.
• South Korean won: Exchange rate is 1,126 won to the greenback. The economy of South Korea is one of the largest in the world, but the value of their currency is really low, even with the introduction of a 50,000 won note back in 2009. Before 2009, rich people could not hold bundles of cash easily due to only having 10,000 won as the highest denomination at the time.

It is OK if they do not choose to redenominate because of the costs associated with it. But its citizens may have to live with that many zeros in their currency.