The North Korean government has issued a warning to private currency exchange merchants, stating that if they exchange US dollars for North Korean won at a rate higher than the official bank rate, the government will confiscate their foreign and local currency. This move aims to stabilize the recent surge in the exchange rate of US dollars to North Korean won, in order to prevent further escalation of the exchange rate.
According to Radio Free Asia, until last summer, the exchange rate of US dollars to North Korean won had been hovering around 8,000 North Korean won per US dollar, but now the black market rate is around 13,000 or 14,000 North Korean won. Meanwhile, the state-owned banks offer an exchange rate of 8,900 North Korean won per US dollar.
Despite the majority of trade between North Korea and the United States being disrupted, the US dollar and Chinese yuan are relatively stable compared to the North Korean won, making them preferred currencies among the North Korean people.
In 2009, North Korea suddenly announced a revaluation of the North Korean won, followed by restrictions on the exchange of old North Korean won for the new currency. This move depleted many North Koreans’ lifelong savings and increased people’s reliance on foreign exchange.
As North Korea’s economy heavily relies on trade goods smuggled or imported from China, when the exchange rate is higher, the cost of these goods naturally increases.
A resident of the city of Rason in northeastern North Korea told Radio Free Asia that instructions from the national bank and foreign exchange places are to be followed when exchanging foreign currency. Relevant information is announced at factory meetings and neighborhood surveillance unit meetings.
She noted that measures to confiscate the currency of those who exchange currency privately were announced at a recent neighborhood surveillance unit meeting.
She revealed that the North Korean authorities are conducting a large-scale crackdown on currency exchange merchants. They will arrest and publicly announce the names, workplaces, and residential addresses of those violating this policy. Information about those who have been arrested will be broadcast through loudspeakers for everyone to hear.
She said that those who used to exchange currency privately were often seen on the streets and at market entrances, but they have not been seen in the past few days.
A resident of Hamgyongbuk-do told the radio station that the exchange rate of the US dollar to the North Korean won skyrocketed last summer, coinciding with the resumption of trade between North Korea and China after the pandemic.
He mentioned that after the authorities announced a wage increase this year, the exchange rate of the US dollar to the North Korean won also increased rapidly. This reminded people of the wage increase in 2002 when the exchange rate of the US dollar to the North Korean won soared from around 200 North Korean won per US dollar to over 1,000 North Korean won, and the price of rice increased nearly tenfold from about 45 North Korean won per kilogram.
He stated, “It is evident that the future exchange rate of the US dollar and product prices will further rise. This is good news for the wealthy, but for the majority, especially the poor, life will become increasingly difficult.”