North Korea’s foreign currency exchange rate plunges the most after currency reform… Impact of lower expectations for trade resumption

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US 100 dollar bill. /photo = pixabay

The exchange rate of the North Korean won to the dollar and the yuan plummeted again. It is analyzed that related institutions and individuals sold foreign currency in a hurry when the North Korean authorities introduced trade control measures despite completing the issuance of new waks (export and import permits).

As a result of reporting through multiple sources, it was found that the exchange rate between the won and the yuan in Pyongyang on the morning of the 8th was 660 won, down 32% from the price of 965 won on the 2nd.

Sinuiju (North Pyongan Province) also showed a similar pattern, and the exchange rate of the yuan in Sinuiju was 680 won on the same day. It is also down 30%.

In the case of the North Korean won-dollar exchange rate, the rate of decline was smaller than that of the yuan, but the decline was also noticeable by region.

The transaction price per dollar surveyed on the same day was 5,990 won in Pyongyang and 5,950 won in Sinuiju, down 16 and 17 percent, respectively, in six days.

Both the dollar and the renminbi fell the most in the shortest period since the monetary reform in 2009.

In the fourth quarter of last year, North Korea’s foreign currency exchange rate fell sharply, but it continued to decline for about two months from just before the founding of the party on October 10, showing that the rate of decline was slower than this time.

Rather, the exchange rate between the dollar and the yuan has continued to rise since the announcement of the application for issuance of new waks in April.

In particular, on the 18th of last month, just before the issuance of waks, the won-dollar exchange rate broke through the 7,000 won level, and the yuan also recovered to the 1,000 won level.

It is confirmed that the sudden drop in the exchange rate, which had been continuously rising in anticipation of trade resumption along with the issuance of new waks, was due to the recently issued trade control measures by the North Korean authorities.

According to a high-ranking source, in the policy pochi (instruction) issued by the Central Party on the 3rd, even if a new WARK is issued, it is not possible to immediately participate in trade. this was included

It is known that these porches were delivered to each institution through the Cabinet’s Ministry of Foreign Economic Affairs’ Saturday study session.

In general, it is rare for a policy pouch from the Central Party to be issued during the Saturday study period, but it seems that the news has been delivered because there is a lot of interest in the trade resumption trend within North Korea.

According to another source, institutions and traders who have been preparing to resume trade since the delivery of the pouch are hastily selling dollars and yuan.

Institutions and individuals who expected cash flow to expand when trade started often borrowed money to buy foreign currency with high interest rates, so they are releasing foreign currency before incurring a bigger loss.

In the midst of this, market prices are rising all at once as the foreign currency exchange rate suddenly plummets and rumors of the continued border blockade spread across the country.

The price of rice in Pyongyang on the 8th was 5,000 won per kg, up 22% in six days. In Hyesan, Yanggang Province, and Onseong, North Hamgyeong Province, 1 kg of rice was traded at 4,900 won, showing an increase of more than 10%.

The price of corn also rose by nearly 20% by region, and in Pyongyang, it was traded at 3,000 won per kg, the highest price since monetary reform.

In the case of grain prices, it is analyzed that the price rises the most during the year due to the lack of supply from late spring to summer, and the news that the border blockade will continue has also influenced the price increase.

As the price of grains such as rice and corn rises emotionally, anxiety among residents is also increasing. In Pyongyang, the source said that there are many residents complaining of anxiety about the rise in rice prices, such as “I think the price of rice will rise to 10,000 won like this” and “Isn’t the march of hardship repeating itself?”

If Pyongyang residents’ dissatisfaction with basic economic life, such as diet, rises, it could affect the foundation of the North Korean government’s governance. Therefore, it is noteworthy whether the authorities will take measures to stabilize market prices.


Source: DailyNK by www.dailynk.com.

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