The depreciation of the yuan against the North Korean won continues. It is common for the foreign currency exchange rate to rise as trade with China temporarily expands ahead of national events such as the establishment of the North Korean regime (Section 9 and 9), but this year is different from previous years.
As of the 6th of this month, as of the 6th of this month in Pyongyang, 1 yuan was traded at 840 North Korean won.
All other regions, such as Sinuiju in North Pyongan Province and Hyesan in Yanggang Province, were found to have similar levels, but among them, Pyongyang showed the lowest exchange rate between the won and the yuan.
Compared to the 590 won exchange rate between North Korea and the yuan before the resumption of freight train service between North Korea and China in January of this year, the exchange rate has risen by 42%, but since the end of July, the exchange rate between the won and the yuan has continued to decline.
Normally, when North Korea-China trade expands, North Korean trade institutions prepare for trade by buying dollars or yuan, which directly affects the exchange rate.
However, the exchange rate between the won and the yuan in North Korea fell even when Chinese customs posted a notice earlier last month that it was planning to conduct inspections of transport vehicles that would participate in trade with North Korea, raising expectations for the resumption of freight truck and train operations between North Korea and China. showed
In China, there was a signal related to the resumption of freight trains or land routes between North Korea and China, but it is analyzed that there was no instruction related to trade expansion within North Korea.
Meanwhile, the North Korean won-dollar exchange rate is still in the low 8,000 range.
As of the 6th, the North Korean won-dollar exchange rate in Pyongyang was found to be 8,100 won. Compared to the North Korean won/dollar exchange rate in January of this year, which was around 4,700 won, it is now 72% higher.
The dollar has remained relatively strong since the exchange rate of both the dollar and the yuan rose sharply in North Korea due to the resumption of North Korea-China freight train service earlier this year, but the yuan has been weakening since July.
This is interpreted as the result of a combination of factors such as the reflection of international market prices and the lack of dollar reserves in North Korea.
In fact, as major cities in China are closed due to the coronavirus, the yuan continues to weaken, and the dollar strengthens day after day due to monetary tightening policies such as the US Federal Reserve’s interest rate hike and the European economic slowdown.
In the international foreign exchange market, the continued strength of the dollar and the weakening of the yuan seem to have had some effect on the exchange rate in North Korea.
In fact, as a result of insider coverage of North Korea, it was found that as the possibility of a prolonged increase in the value of the dollar increased, Chinese counterparts (traders) who deal with North Korean trading organizations also preferred the dollar to the yuan as the currency of their transactions.
An insider inside North Korea said on the 6th, “The Chinese side also wants dollars rather than yuan these days.
On the other hand, it is also analyzed that the rate of increase in the dollar exchange rate is high because North Korea’s dollar deficit is larger than the yuan.
Choi Ji-young, a research fellow at the Korea Institute for National Unification, said in a phone call with this report, “It is possible that more dollars than the yuan have been absorbed as a result of the foreign currency absorption policy implemented by the North Korean authorities in recent years. It may have caused a difference in the exchange rate between the yuan and the yuan.”
Source: DailyNK by www.dailynk.com.
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