The exchange rate in the North Korean market continues to rise. It appears that the North Korean authorities’ policy of controlling individual currency exchange transactions is having an adverse effect.
According to Daily NK’s regular survey of North Korean market prices, on the 15th, 1 dollar was traded for 16,100 North Korean won at a market in Pyongyang. The North Korean won-dollar exchange rate in Pyongyang has been fluctuating slightly every day since hitting an all-time high of 16,500 won on the 2nd.
The North Korean won-dollar exchange rate in Pyongyang has fallen by about 400 won since the beginning of this month, but has remained at the 16,000 won level for more than two weeks.
Similar fluctuations in exchange rates were observed in other regions as well. As of the 15th, the North Korean won-dollar exchange rate at the Sinuiju market in North Pyongan Province was found to be 16,200 won, 100 won higher than in Pyongyang.
The exchange rate for the North Korean won/dollar in Sinuiju on the 2nd, during the previous survey, was 16,700 won, which according to our newspaper’s North Korean market price survey data, is the highest since the currency reform in 2009.
The North Korean won-dollar exchange rate had been in the 8,000 won range since before COVID-19, but it fell to the 4,000 won range at the end of 2021 as trade was controlled and foreign currency demand decreased due to border closures.
However, the exchange rate soared in June as North Korean authorities systematically controlled foreign exchange transactions by mobilizing strike teams to absorb dollars held by individuals and to activate public financial transactions. (See related article: Deploying strike teams to control foreign currency transactions, causing dollar exchange rate in North Korean market to soar)
With the exchange rate soaring, the North Korean authorities are pushing the ‘Local Development 20×10 Policy’, which requires the import of massive amounts of raw materials, supplies, and machinery, and the demand for foreign currency is not decreasing. In addition, as the dollar exchange rate has surged by about two times compared to before, it is understood that individuals’ desire to hold dollars has also increased.
Although the increase is more gradual than that of the dollar, the North Korean won-yuan exchange rate is also showing an upward trend in Pyongyang, Sinuiju, and Hyesan.
In fact, according to our investigation, the North Korean won-yuan exchange rate in the Pyongyang market on the 15th was 1,900 won. This is a 52% increase compared to the exchange rate (1,250 won) at the time of the investigation in early January this year.
Compared to early January this year, the foreign exchange rate in the North Korean market has risen significantly (94% for the won/dollar, 52% for the won/yuan), and prices in the North Korean market have remained relatively stable. Compared to the price at the beginning of this year, the price of North Korean rice currently traded in the North Korean market has risen by 30.7%, and the price of corn has risen by 41.6%.
However, this is a similar price to mid-September last year, when the won-dollar exchange rate was in the 8,000 won range and the won-yuan exchange rate was in the 1,200 won range. The foreign currency exchange rate is not directly affecting the prices of rice and corn in the North Korean market.
Meanwhile, it has been reported that the North Korean authorities are currently pursuing a policy of strong control over individual currency exchange transactions, but are unable to punish the big money changers who actually move the market exchange rate. This is because most of the big money changers are in collusion with officials from the law enforcement agencies.
As a result, North Korean authorities’ control of currency exchange transactions is having the counterproductive effect of encouraging the exchange rate to rise.
In relation to this, a source inside North Korea said, “The money changers at the top are in charge of such a large sum of money that they cannot be touched carelessly, and are even called ‘protected animals’ by the judicial authorities,” adding, “Even if we mobilize strike forces, only the small-time money changers are punished, and the exchange rate only goes up.”
Source: www.dailynk.com
