Eli5 Why do some countries measure their currencies in large units?

Question

For example in Vietnam, lunch can be bought for 50,000 VD and in South Korea, apartments can cost several MILLION Won. Why do some countries use such large denominations?

In: Economics

Answer 1

It is actually the inflation’s side effect.

The money worth less than the paper they paint it on. So, they use a higher number.

You can see how it begins (again) in Turkish Lira. In 2007, Turkey removed 6 zeroes from the money (ie 10 million TLs become 10 TLs). The $/TL was something like 1.20.

Now, $/TL is 8.65. TL loses it’s worth.

To somewhat counter that, countries issue higher bills. So that the minimum wages can keep up against the inflation and people can afford basic stuff like electricity bills and such.