Most North Koreans keep their dollars at home and use them to trade goods, according to Kang Mijin, chief executive officer of NK Investment Development, a data services company that provides research and information on North Korean markets. Many retail outlets in the capital Pyongyang have stopped accepting dollars or prepaid overseas currency cards from foreigners in the country, and are instead asking them to pay in won, the Russian embassy said in a Facebook post in October last year.įinancial authorities were ordering residents to report their holdings of foreign currencies and deposit them in banks, Daily NK reported this April, citing an unidentified person in North Korea familiar with the matter. “Even though imports dropped, the won wouldn’t have strengthened so much if the dollar remained in demand in the local markets,” Kim said.
The won’s gains imply that foreign currencies have lost their allure within North Korea, too, and that suggests some kind of government crackdown on their use, he said. The slump in imports isn’t the only reason for the surge, according to Seoul National University’s Kim. Satellite images show how once-busy bridges and roads between North Korea and China became empty after the border closure, according to Ramon Pacheco Pardo, a professor of international relations at King’s College London. Imports from China, North Korea’s biggest trading partner, dropped more than 90% year on year every month from August 2020 to February this year, with declines continuing thereafter, according to the Korea International Trade Association, a trade group in Seoul. “As imports into the North crashed, demand for overseas currencies kept falling, too.” “Foreign currencies were still in demand” until then, Lim said.
Korea currency full#
imposed a full trade and financial embargo in 2017, on top of sanctions already in place from the United Nations, but goods still made it into North Korea, smuggled in from China.īut that all changed when North Korea shut its borders in 2020, according to Lim Soo-Ho, a senior researcher at the Institute for National Security Strategy, a government-funded think tank in Seoul. Many observers say the coronavirus pandemic is behind the surge. They get information on trading of the currencies at the jangmadang.Īccording to Daily NK, the rate was generally steady at about 8,000 won per dollar since early 2013, but the won started gaining last year, reaching a monthly average of 4,723 in August, the strongest since June 2012. Running a private currency exchange is illegal in North Korea, so the two media companies, Asia Press International of Japan and Seoul-based Daily NK, use secret human networks inside the isolated country to compile their rates, according to Jiro Ishimaru, a journalist at Asia Press International, and Lee Sang Yong, editor in chief of Daily NK. The unofficial rate is around 5,200 won per dollar. Its official rate has been steady at around 100 won per dollar for the past decade, an artificially strong level with no use as an indicator. North Korea’s unofficial exchange rate, which is tracked by the two news outlets, is formed in the country’s “jangmadang,” local markets that have grown to become a large informal economy. The North may be trying to boost the won to support the economy, but continuing such attempts “could end up harming the real economy even more.” “A currency normally depreciates when a country is facing troubles, but the opposite is happening in North Korea,” said Kim Byung-yeon, a professor of economics at Seoul National University. Whatever the reason, most observers agree it’s no good thing. There are competing theories for why it’s happening, ranging from Kim’s pandemic border closure killing demand for foreign currencies to the isolated country instituting a crackdown on their use.
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