Since the beginning of the year, prices in the North Korean market have been unstable. The dollar exchange rate fell again, and the price of rice (1 kg) was found to have collapsed around 4000 won. On the other hand, corn prices are rising, and there is a strange phenomenon.
Labor Secretary General Kim Jong-un emphasized at the closing ceremony of the 8th Party Congress held on the 12th that “the economic problem must be solved urgently in order to stabilize the people’s life”, but it is expected that it will not be easy to achieve economic stabilization that the people can experience.
Summarizing the Daily NK coverage, as of the 11th, the North Korean won-dollar exchange rate was 6100 won in Pyongyang, 5900 won in Shinuiju (North Pyongan Province), and 5800 won in Hyesan (Yanggang Province). It is the first time in 9 years since 2012 that the dollar exchange rate in North Korea has reached 5,000 won.
There was a slight difference in the drop in the dollar exchange rate by region. Compared to the 24th of last month, Pyongyang 7.5%, Shinuiju 9.2%, and Hyesan 16% fell. Compared to Pyongyang and Shinuiju, the dollar exchange rate decline in Hyesan was remarkable.
In particular, rice prices showed a sharp decline this month. It was confirmed that the price of Pyongyang rice, which was traded at 4,500 won for 1 kg at the end of last month, fell to 3500 won on the 11th of this month. It has fallen by more than 22% over the past 15 days.
Rice prices in the North Korean market are relatively stable from December, usually just after the harvest season, to early January of the following year. Nevertheless, the rapid decline in rice prices in a short period of time can be interpreted as being the main reason that the authorities increased the supply of rice as part of measures to stabilize people’s lives.
In addition, the sharp decline in purchasing power due to the decrease in income of North Koreans due to the new coronavirus infection (Corona 19), prolonged sanctions against North Korea, and flood damage seems to have affected the decline in rice prices.
In addition, the government’s aggressive price control seems to have played a part. There is a possibility that the merchants who had secured food with a strong crackdown in mind and the price increase in mind had released the supply at once.
However, even in the midst of this, corn prices rose slightly (2000->2300 won). Accordingly, the price gap between rice (3,500 won) and corn (2,300 won) has narrowed significantly. This is believed to be because North Koreans recently searched for corn, which is relatively cheaper than rice.
In the North Korean market, the price of pork in the North Korean market is 15,000 won in Pyongyang, 15500 won in Sinuiju, and 16,000 won in Hyesan, a slight increase compared to last month. However, according to sources, unlike market research, it is difficult to find pork itself in the market due to the influence of African swine fever (ASF).
Therefore, it is said that as long as the quantity is secured, it is actually traded at a price of 20,000 won or more. Based on this phenomenon, it seems that there is a possibility that the authorities are holding back the price increase even when there is no pork supply.
Meanwhile, oil prices such as gasoline and diesel showed a downward trend last month, but increased significantly this month. As of the 11th of this month, the price of gasoline was 10000 won in Pyongyang, 11,000 won in Shinuiju, and 12,000 won in Pyongyang, and the diesel price was confirmed as 8,000 won in Pyongyang, 7900 won in Sinuiju, and 8200 won in Hyesan for 1kg.
Petroleum prices, such as gasoline and diesel, which depend entirely on imports, show frequent price fluctuations depending on the level of import, but compared to the end of last month, gasoline prices rose by 28% in Pyongyang, 44% in Sinuiju, and 51% in Hyesan, respectively, and in the case of Pyongyang 60%, Shinuiju increased by 58% and Hyesan by 43%.
In particular, despite the falling exchange rate, the price of oil such as gasoline and diesel rose, leading to a’decoupling’ phenomenon. In North Korea, fluctuations in the exchange rate and oil prices appear similar, but as the exchange rate continues to fall despite the rise in oil prices, there is a reaction that is not shy inside North Korea.
An internal source said, “The price of oil and the dollar usually rises and falls together, but the market price now hasn’t been shown well before,” he said. “People also say that it’s a little weird.”
However, to date, the situation that the North Korean authorities appear to have directly intervened in the decline of the exchange rate has not been captured.
Professor Kim Byeong-yeon of the Department of Economics at Seoul National University said, “The decoupling phenomenon of the decline in the exchange rate and the rise in oil prices is likely to have been a haphazard intervention rather than a natural economic flow.” “If the government’s measures had an effect, the result of fluctuations in exchange rates and oil prices for different reasons. It seems to have been shown.”
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